Our CEO Lawrence Yeo is FT’s Asia Contributing Editor and has been writing for fDi (foreign direct investment) magazine, ‘View From Asia’ column, Financial Times, London since May 2005:

  9. ASIA REVIVAL IN 2007 (26 Jan 2007)
  23. 2011 ASIA OUTLOOK (7 Dec 2010)
  28. ASIA ICT SECTOR: STILL HOT! (21 Sep 2011)
  29. ASIA GREEN TECHNOLOGY (18 Nov 2011)
  30. MYANMAR MARKET ENTRY (1 Feb 2012)
  32. ASIA LOGISTICS (15 May 2012)
  33. ASIA PORTS AND SHIPPING (10 Jul 2012)
  35. ASIA GREEN ENERGY (9 Nov 2012)
  39. ASIA SMART CITIES (25 Jul 2013)
  40. ASIA HQ LOCATIONS (23 Aug 2013)
  42. ASIA SME OUTLOOK (25 Mar 2014)
  45. ASIA SEZs AND FTZs (28 Sep 2014)


The Singapore Marketer: Singapore Market Entry – a 2003 Primer (26 Oct 2002)

ASME EDC: Overcoming Difficulties & Trials  (Mar 2003)

Reuters: Investment in South East Asia (May 2007)

India SE Magazine: Invest in South East Asia (Aug 2007)

South China Morning Post: Effective Asia Location Branding (2 Feb 2008)

Marketing Institute of Singapore (MIS) blog: International Business Planning (1 Mar 2008)

Marketing Institute of Singapore (MIS) blog: Purpose to Go International (2 Apr 2008)

Marketing Institute of Singapore (MIS) blog: Management Commitment (2 Apr 2008)

SME Magazine: Market Entry & Expansion Strategy (6 Dec 2010)

India Market Entry Strategy (International Enterprise of Singapore website, 5 May 2011)

SME Magazine: Distributor Partner Search & Evaluation (June 2011)

Singapore Business Review: Competitive Strategy for a Slow-Growth Market (Dec 2011)

Singapore Business Review: Sector Opportunities (August 2012)



Oct 2005, View from Asia, fDi magazine, Financial Times, London.

The Malaysian Industrial Development Authority must fight for foreign investment in the world’s most competitive region. Lawrence Yeo finds out how it intends to compete with the big five: China, India, Thailand, Vietnam and South Korea.

As Malaysia faces increasing FDI competition from other Asian countries, its strategy is to focus on the manufacturing and services sectors. To help make the environment more conducive to investment, the government has established industrial training institutes and introduced measures to improve the public delivery system, among other things.

The 5 most attractive Asian locations for FDI in 2004-2005 are China, India, Thailand, Vietnam and South Korea.

What can Malaysia do to move up the list?

Malaysian Industrial Development Authority (MIDA) is the first point of contact for investors. With its headquarters in Kuala Lumpur, MIDA has established a global network of 16 overseas offices in North America, Europe and the Asia-Pacific region. In Malaysia, MIDA has 10 branches to assist investors in the implementation and operation of their projects. I asked MIDA director general Datuk R. Karunakaran how Malaysia intends to compete with its many formidable neighbours for FDI inflows.

Q: What is the government’s current strategy for promoting and sustaining economic development?

A: It is to ensure the continued economic development of Malaysia, under the Industrial Master Plan 3 (2006-2020) currently undertaken by the government. The thrust is to sustain the contribution of the manufacturing sector to the Malaysian economy at more than 30% while increasing the contribution of the services sector. The intense competition for FDI and the emergence of new economies will pose major challenges in the years to come.

Q: What are Malaysia’s FDI disadvantages and how are they being addressed?

A: The Malaysian government is aware of the growing requirements of industry for new and specific skills. To address the concerns of industry, the government has established many industrial training institutes, including several advanced skills training institutes, in collaboration with foreign governments. To lower the costs of doing business in Malaysia for investors, the government has introduced measures to improve the public delivery system in the country.

Q: What efforts have been made to improve the country’s business and investment climate?

A: To maintain the attractive business and investment climate in Malaysia, the government has introduced efforts to ensure, among other things, that: Malaysia’s costs of doing business remain competitive; there is continuing improvement in key infrastructural facilities; the public delivery system is efficient; and the investment incentives are competitive in attracting targeted activities and new sources of growth.

Q: Which sectors and source countries are you targeting?

A: In line with its aim of creating a dynamic and vibrant industrial sector, Malaysia focuses on attracting investments into the manufacturing and services sectors. The industries being promoted include:

● High-technology, capital-intensive and knowledge-driven industries, such as advanced electronics, biotechnology, optics and photonics, wireless technology, display technology, petrochemicals, pharmaceuticals, medical devices, and information communication technology.

● Industries manufacturing intermediate goods, such as machinery and equipment, components and parts, and moulds and dyes.

● Resource-based industries, such as food processing and value-added products from palm oil biomass.

In the services sector, Malaysia also welcomes the setting up of regional establishments, such as operational headquarters, international procurement centres, regional distribution centres, and regional and representative offices, as well as other service activities, such as research and development, design, prototyping, testing, logistics, marketing, sales and distribution. The source countries being wooed actively are the major capital-exporting countries in North America, Europe, east Asia (China, Taiwan, Japan and South Korea) and Australia.


Dec 2005, View from Asia, fDi magazine, Financial Times, London.

Companies that want to launch in Asia but avoid the pitfalls should take time to find a location that complements their organisation, and allow the overseas operation the flexibility to cater to local customers. Siemens’ Siegfried Neubauer explains why to Lawrence Yeo.

Everybody talks about Asia’s attractiveness and market potential but not everyone will reap it successfully. The monthly cash burn rate of a small foreign company set up in Singapore is already about S$120,000 and yet we do not read much of market failures. All that glitters in Asia is not gold, and companies wanting to venture there should ensure they do adequate due diligence to minimise the risks of getting burnt.

In Asia, the prime investment driver for foreign companies is an expectation of economic growth; second is the need to increase business support to existing Asian customers; and third is the lower cost of production in Asia. Investment drivers are not the whole story, though. A common question posed by corporates is: “After we commit to invest in Asia, what then?” In the coming months, I will talk to foreign investors from around the world and share their words of wisdom – and warning. Who knows, it might just save you from making costly Asia investment errors.

Fruitful venture

Siegfried Neubauer, vice-president of German manufacturing giant Siemens’ electronics assembly division in Singapore, reports the division has “recently reaped the fruits of [its] investment harvest in Singapore”, having sold off its first SIPLACE HS-60 equipment assembled in Singapore, after a successful technology transfer. “We are also the first surface-mount technology company to build a manufacturing plant with the complete product life management in Asia,” Mr Neubauer says. “Facilities such as research and development, product life management, sourcing, assembly and logistics are all carried out from Singapore. Within a very short time frame, the company has also built another manufacturing site from scratch outside of Germany, to turbo our manufacturing and research and development expertise.” An assembly centre in China will be important in supporting the Singapore operations. Mr Neubauer adds: “We are keeping a close eye on growing markets like India and Thailand, as we invest in supporting facilities to ensure that our customers enjoy localised service support.” Singapore has proved the right location: “We have found the right country with the complementary mindset to fit into our global organisation. Taking time to review the hard and soft factors to ensure a strong fit among the investments and the existing infrastructure definitely pays off.”

For foreign companies like Siemens, investments in Asia need to be more carefully thought out than they often are, Mr Neubauer believes. “The selection of a facility to complement the global counterparts requires an holistic approach. In addition, this expansion or investment needs to add value to the supply chain, in terms of resource allocation,” he says. “On the other hand, regional investments are usually given more leeway to function independently to serve the local requirements.”

The Asian view

In contrast, Asian companies view investments in the region as an extension of their organisation. They are more likely to jump into an investment if they think it has short-term benefits. Regarding management, they are more likely to have a tighter control over the office progression. “There is the assumption that the customers are similar and need to follow the headquarters’ directions closely,” Mr Neubauer says. In the Siemens global structure, in contrast, regional offices are given independence to serve local customers’ requirements. “Every country has different requirements, so give them independence to serve the customers in their best way,” he advises.

What other counsel does Mr Neubauer offer on investing and doing business in Asia?

“Always do your research about the external and internal environment before embarking on a decision. Resources are limited; however, new investments require lots of support before they take off,” he says. “Bring your people with lots of drive to build up the new venture and choose carefully when filling the positions. The calibre of the hired personnel determines the rate of success.”


Feb 2006, View from Asia, fDi magazine, Financial Times, London.

In mid-January, I interviewed several western business leaders from companies in New Zealand and the US. While seeking their views and input on doing business in Asia, and particularly Singapore, I came across several frequently repeated comments about Asian business culture. As this was not a major survey involving hundreds of respondents, the shared views below are not representative – or even meant as broad generalisations – but they may shed light on doing business in Asia.

Intangible aspects

When I asked these westerners why they had chosen to do business in Singapore, almost all of them said that they place about 50% of emphasis on financial and market attractiveness. The other half of the equation, however, is a desire to try to understand the reserved Asian culture and the ‘soft’, intangible aspects of business and management. Three frequent comments were heard regarding Asian business behaviour:

l “Asians do not always say what they mean, or mean what they say.”

The interviewees said that they had experienced their Asian potential customers or partners saying “yes” when they actually meant “no”. This indirect way of communication was a source of frustration to them and often masked the true intent, making business negotiations slow and sales difficult to forecast.

2 “Asians do not always say what they know.”

Asian employees may not be as open as westerners expect them to be during meetings in front of other colleagues or provide active feedback on their competitors’ latest moves. This silence could be from a fear of losing their jobs – or in case their bosses think that the competition’s success is a reflection of their incompetencies. Westerners have learnt that in such cases they need to ask plenty of questions – and to communicate that it is acceptable to let western bosses know what is going on in the business and marketplace, as this helps in their decision-making.

3 “Asians do not always say things directly.”

Asian business people do not always appreciate westerners’ direct, ‘in your face’ management style and can end up taking matters personally due to their own non-confrontational approach to communication. Or they will use a third party to act as a go between to communicate to the westerners. One general manager of a white goods company remarked that doing business in Asia is like watching a duck that appears calm and serene on the surface, but beneath the water is paddling furiously. And often executives in Asia are ‘paddling’ in a certain direction without having complete information or knowing the true picture of the business situation.

Long-term relationships

Hence, a lot of questioning and second-guessing may be required for any western business people or investors wanting to enter Asia. They have to make a commitment to get to know their Asian counterparts and employees, to sow long-term relationships and be willing to wait to harvest any results. This may go some way to explain why some business in Asia takes a long time to grow – time is needed to read between the lines, understand hints and innuendos, observe body language, allow time for the Asians to know westerners well and earn trust. Asia is a long-term play but for patient investors, it is worth the wait.


17 Mar 2006, View from Asia, fDi magazine, Financial Times, London.

Many of our repeat Fortune 500, global MNC and SME clients have regularly sought our Asia market entry and marketing strategy advice, since Asia is so heterogeneous and diverse. They would ask, “Is Asian country 1’s industry X attractive? How about Asian country 2’s industry Y?”. Such randomised market selection and industry targeting is inadvisable. To share with our global readers how we advise our global clients to enter Asia, here’s a sneak peak inside the mind of an aspiring World’s Favourite Asian Consultancy. We can identify and assess Asia opportunities using a simple framework which can be easily yet simultaneously performed across multiple Asian countries at one go.

Strategic intent to enter new Asia markets: increase new capacity, consolidate operations, improve operating conditions, introduce new technology, produce new product lines, lower operating costs, supply globalizing clients, shift headquarters, establish back office operations, manufacturing facilities, distribution centres, retail stores, provide after-sales servicing or not, etc
  Asia legal & regulatory environment, competitive environment, business environment, etc
Key success factors, value / distribution analysis, marketing or branding audit, Asia strategy review
Companies’ general approach to their Asia investments can be in the form of a 4-phase process of screening, fieldwork, negotiations and implementation. They must also determine the top 5 screening criteria [e.g. taxes, labour, real estate, transportation, market demand/size, incentives, environment, utilities, community, etc].
  Supplement with Asia surveys (corporate, consumer/retail/brand research)
1 Strategic Fit
2 Estimated Asia market size
3 Potential Asia revenue
4 Return on Asia investment
5 Value proposition identified
6 Size of Asia investment needed
7 Economies of scale and learning
8 Asia location advantage
1 Asia business-level strategy
2 Multi-domestic strategy
3 Global strategy
4 Transnational strategy
1 Exporting to Asia (direct, agents like distributors or wholesalers)
2 Licensing (franchise, contract manufacturing, management contracts)
3 Strategic Alliances with Asian companies (Joint Ventures)
4 Acquisitions of Asian companies (e.g. production companies)
5 Establishment of a new Asia subsidiary (e.g. sales)
6 Asia Business Development, Asia Marketing/Rep Office (e.g. AsiaBIZ Strategy)


To help analyse which Asia market or industry is attractive, we further modify the GE-McKinsey Portfolio Analysis. Market (industry) attractiveness replaces market growth as the main factor of industry attractiveness. In turn, many factors affect market attractiveness: market size, market share, market profitability, pricing trends, competitiveness intensity, entry barriers, market segmentation, etc.

Let’s take Singapore for example. We can use a rating scale from 1 to 5 where 1 = very unattractive and 5 = very attractive. The model takes into account ratings for:

a. GDP output;

b. Market growth rate over the last 5 years: growth is the most important assessment factor and it takes precedence over size and other factors when considering industry attractiveness. It is based on the historic growth of each industry for the past 5 years.

c. Concentration of companies within the same industry: high competitive intensity translates to lesser profit shared among players, hence lowering attractiveness of the industry.

d. Product sales nature: this is defined as the dependency of sales of products/services in the specific industry on the changes in the business environment.

e. Government support: The Singapore Government plays an active role in supporting Singapore’s business; therefore government support is a crucial factor for evaluating industry attractiveness.

Weights Assigned Total Weights = 1
Industry sectors Overall Weighted Industry Score Attractiveness
Goods producing industries:
Electronic products & components 2.6 MID – HIGH*
Food, Beverages & Tobacco 2.9 MID
Other manufacturing sectors 2.5 MID
Wearing apparel, footwear & leather products 1.4 LOW
Publishing & Printing 2.2 LOW
Construction & Engineering 2.0 LOW
Services producing industries:
Wholesale & Retail 4.0 HIGH
Transport, Logistics & Communications 3.0 HIGH
Business/Commercial/Professional 3.1 HIGH
IT, E-commerce 3.9 HIGH
Other services 4.1 HIGH
Financial services 2.6 MID
Hotels & Restaurants 1.8 LOW


Here, our analysis shows that Singapore’s industries in order of descending attraction are:

High attractiveness: Wholesale & Retail, Transport, Logistics & Communication, Business / Commercial / Professional, IT & E-commerce and Other Services.

Mid attractiveness: Food, Beverages & Tobacco, Electronic Products & Components, Other Manufacturing Sectors and Financial Service.

Low attractiveness: Wearing Apparel, Footwear & Leather, Publishing & Printing, Construction & Engineering and Hotels & Restaurants.

Also, we look at our clients’ market strength. For Small and Medium Enterprise (SME) client, we will look at Asia market conditions and likely Asian competitors’ countermoves and recommend using one or a combination of niching strategy, substitution strategy, free-riding strategy and strategic alliance strategy.


17 May 2006, View from Asia, fDi magazine, Financial Times, London.

Vibrant Singapore ICT Sector

Singapore is very small in natural size with very limited natural resources and much obstacles to overcome. However, I like what Dr Phil Pringle wrote in his book, Leadership Excellence: “It’s not the size of the dog in the fight. It’s the size of the fight in the dog. The fight draws out of us far more than we think we have. The desperation aroused overcoming life-threatening moments surfaces courage and strength that remain undiscovered in comfort” (page 97).

Let’s look at one such pit-bull terrier fighter, the Singapore ICT sector. Singapore’s ICT sector is simply vibrant. According to Infocomm Development Authority (IDA), the sector expanded by 8.9% in 2005 and was worth an estimated US$24.1 billion. External demand, which grew by 11%, provided much of the growth impetus. The export market (58%) contributed more to the total ICT industry’s revenue than the domestic market (42%) in 2005. As in previous years, the export market (58%) contributed more to the total infocomm industry’s revenue than the domestic market (42%) in 2005.

This vibrancy is due to 3 main factors: its excellent ICT infrastructure, regulatory environment and the readiness and willingness on the part of the three main stakeholders (i.e. governments, business communities and households) to adopt new technologies and to fully benefit from ICT. World Economic Forum in its Global Information Technology Report (GITR) ranked Singapore #1 (2004 to 2005) and #2 (2005 to 2006) on Networked Readiness Index (NRI) which measures the degree of preparation of a nation to participate in and benefit from ICT developments. Hot on Singapore’s heels are other Asian countries like Taiwan (#7), Hong Kong (#11), South Korea (#14), Australia (#15), Japan (#6), New Zealand (#21), Malaysia (#24), Thailand (#34), India (#40) and China (#50).

We’ll review Asia’s intra-competition in future articles where we see Great Danes fighting with Bull Mastiffs and other dogs. Currently, Singapore’s ICT industry contributes over 6% of Singapore’s GDP, revealing much room for further growth. NCS Group Chairman Mr. Lee Kwok Cheong sees a bright future for this sector. Infocomm Development Authority (IDA) has formulated iN2015, the ICT masterplan for the next big leap. iN2015 is a 3Ps effort involving the public, private and people sectors working hand in hand.

Domestic ICT Powerhouse

Domestically, global ICT companies have established operations in Singapore, ranging from research to product development to marketing and serving Asian markets and beyond from Singapore. Singapore offers excellent intellectual property protection and data security. The IDA 2005 Annual Survey of Infocomm Usage in Households and by Individuals show that 74% of households own personal computers, with 28% owning two or more in each home. Two out of every three such households (or 66%) enjoy Internet access with 52% already on broadband. The internet has become the preferred mode of inter-personal communications in Singapore, with nine in ten (or 90%) using the Internet to send or receive emails. Singaporeans have embraced ICT for work, learning and leisure which has made ICT now very much a part of local lifestyle. Even top-dogs need to have top trainers and groomers and the Singapore government executes its role superbly. In ICT infrastructure, the Singapore government will soon launch a high-speed, next-generation National Broadband Network. IDA will enhance its manpower development schemes under its 5-year Infocomm Manpower Development Roadmap so as to attract and groom ICT talent.

Accelerating Internationalisation of Singapore ICT

Singapore ICT companies are entering emerging markets in Africa, Eastern Europe and the Middle East. They help to bring the ‘Made in Singapore’ quality branding overseas. These companies offer vertical applications and next-generation ICT technologies like interactive and digital media, entertainment, education, financial services, government services, healthcare, tourism and manufacturing. International Enterprise of Singapore (IE) has a major role and mandate to help Singapore-based companies internationalise, says Mr. Andrew Khaw (Acting Director, Electronics & Precision Engineering and Infocommunications Technology Divisions). He listed some of these initiatives.

The first is the LEAD (Local Enterprise and Association Development) programme. IE Singapore is currently working with SiTF to leverage on LEAD funding to strengthen Singapore’s ICT capabilities.

The second is ‘brand Singapore’ systems. IE aims to leverage on Singapore’s strong brand name, track record and experience as a regional financial and transport hub by showcasing and marketing Singapore companies who have the products and solutions to enable other countries to capture the same best practices.

A third is cross-fertilizer industry consortiums. IE Singapore initiated its iPartners Programme where it encourages Singapore companies to band together as an alliance to combine their strengths and resources to offer a comprehensive suite of solutions to customers. Fourth, IE helps to increase participation in international showcases like CeBIT, GITEX, and Consumer Electronics Trade Show in the United States. Fifth is the integration of design process. IE Singapore launched the Iconic Design Initiative to help Singapore-based companies develop iconic products to enhance their competitiveness in the global marketplace. The programme also seeks to encourage companies to integrate design processes as part of their medium- to long-term product management and business strategies. Sixth, through the multi-agency initiative, BrandPact, IE Singapore supports both firm-level branding capability development as well as industry-wide branding efforts.

Opportunities for Foreign Companies

Foreign companies can explore Singapore ICT capabilities and evaluate which Singapore ICT companies to engage their services, to partner with or trade with to serve the needs of their local economies. Key sectors are e-government, financial technology and intelligent transport systems.


Singapore is a recognised global leader in e-government. Singapore ICT companies deploy a wide spectrum of unique technologies and solutions to provide services in functional areas of Infrastructure, Technology Solutioning, Managed Services, Master-planning, and Consultancy in key sectors such as Defence, Education, Health, Law, Trade, and Transport. Key Singapore players include NCS Group, ST Electronics, Crimson Logic and Ecquaria.

Financial Technology

Singapore is a known leading financial centre. Its financial technology companies have developed well-rounded exposure and substantial experience in understanding the needs of financial institutions, providing end-to-end services and financial software solutions ranging from IT infrastructure outsourcing, IT applications outsourcing, business process outsourcing (BPO) to business transformation outsourcing. Key Singapore players include System Access, BCSIS and Fairex.

Intelligent Transport Systems (ITS)

Singapore’s highly urbanised and land-scarce city has helped it to develop an efficient traffic management system. Singapore’s ITS providers thus have an edge in the development and application of advanced technologies such as Artificial Intelligence, Mobile Communications, Global Positioning System, Smart Card, and Internet technologies to meet the needs of airports, sea ports, transport hubs, transport infrastructure operators, and other end users. Key Singapore players include ST Electronics.

Consumer ICT Industry

Singapore-based consumer electronic companies continue to deliver high-quality products and useful innovations to end consumers through a fast expanding global distribution network. Creative Technology’s world-leading audio cards are installed in about 70% of the world’s PC audio systems. eSys is the global leader in the technology distribution of desktop hard disk drives. Trek 2000 produces the ThumbDrive, the world’s first and smallest portable storage drive. Muvee Technologies produces muvee autoProducer, the world’s only smart automatic video editing software. Akira, Enzer, Mercury and Shiro are just some of the upcoming brands that have penetrated many markets with their attractive product designs and competitive pricing, while Aztech, Compex and SmartBridges have also won international success in the area of networking products. With more than 300 points of presence in Southeast Asia and China, and a further 100 each in the Americas, Europe, North Asia and Pacific, Singapore ICT companies’ global presence means that they are able to meet the varying needs of OEMs across many sectors.

Interviews with Singapore ICT CEOs

To give foreign companies a better understanding of how Singapore ICT companies think, do business and expand, I interviewed 3 CEOs of several Singapore ICT companies, all role models of excellence in serving and meeting marketplace needs:

Dr Chong Yoke Sin (CEO, NCS Group) Mr Vikas Goel (Chairman and Group Managing Director, eSys Technologies) Mr Seah Moon Ming (President, ST Electronics)


Q1: What are your expansion plans? Are there plans for new facilities, and if so, where in Asia? How important is Asia to you?

eSys: Asia is very important market for us. We have broadly divided it into 3 parts – ASEAN, Indian Subcontinent and China. We are moving ahead steadily with our expansion plans in three sub regions. Last year we acquired a company in Vietnam and now eSys has a strong network of channel partners and we have been able to extend our global vendor relationships to Vietnam. We are in the process of setting up office in Philippines. This year our state-of-the-art PC manufacturing facility with annual production capacity of 3 million units became operational in Singapore. In India for technology distribution, we have countrywide reach through 30 offices. We are setting up a 2000 employee Integrated Facility in Chandigarh in North India. China is a huge market as well as sourcing hub. Some of eSys branded IT products and peripherals are being sourced from China. We have expansion plans for China and we are working towards it.

NCS: NCS intends to expand into additional Asian markets like Korea & Japan, as well as into additional cities in China. These represent the greatest source of growth for the company. We envisage that our processing centres in Suzhou and Chengdu will grow. We foresee that processing centres in cities like Dalian will be setup to cater to the Korean and Japanese markets in the near future. We also think that our existing processing centres will expand to involve call-centres from cities in China. Asia is certainly very important for NCS Group.

ST Electronics: We plan to expand our marketing and project offices in Asia to reach out to global clients for our line of system offerings, and to provide responsive support. We also selectively build up overseas facilities for production of hardware and development of software to improve on our cost competitiveness. In Asia, we will continue to increase our presence in China, covering more provinces and cities. We will also be looking at other Asian countries, particularly South East Asian countries to increase our presence. Asia is an important market for us. We already have major projects and track records in Asia, in the areas of mass rapid transit (MRT) systems, intelligent buildings, intelligent transportation, public safety command and control and e-government systems. These include rail projects in China (Guangzhou and a recently awarded project in Beijing), Taiwan, Manila, Thailand and Singapore as well as e-Government projects in Singapore, Botswana, Hong Kong and Maldives.

Q2: What is your company’s company’s general approach to Asia investment?

eSys: We have moved specific operations to locations where they can be carried out in most efficient and cost effective manner. Case in point is moving of PC Manufacturing facility to Singapore. This is a calculated decision because efficiencies in terms of logistics, higher productivity, automation and good infrastructure have resulted in lesser cost of production. So our investment decisions in Asia, as anywhere else, are led by ‘best fit’ approach i.e. making investments where we find the appropriate skill sets and facilities for a particular task.

NCS: One of NCS Group’s key markets is in government solutions. Often there is potentially only one client in a country – that is at the Federal Government level; for some geographies however, there are State and even Local Governments who have significant IT budgets; NCS will setup offices in countries where we see potential for size of market, tax-friendly policies, incentives, and ability to deliver our services without compromise.

ST Electronics: For marketing and project offices, we tend to look at locations where we plan to launch our systems, products and services. China is one country where it has many infrastructure projects and promises good business prospects for electronic system solutions. For examples, in the areas of MRT systems, we will set up operations where the Government has approved budgets or plans to implement new MRT lines or expand existing MRT lines. With presence in about seven cities in China we have ensured that our offices synergise with each other, focusing on the growth areas of intelligent rail and road transportation solutions, intelligent building management systems, pubic safety solutions and e-government solutions.

For facilities to support our global operations, we tend to look at locations where quality and cost-competitive resources such as software expertise and hardware supplies are readily available. We will also examine other factors such as tax incentives, and proximity to markets where we sell our system solutions.

Q3: In what ways has your company’s Asia expansion and investment strategies differed from your rivals from your home region?

eSys: Where as majority of other companies have seen Asia either solely as a back office, sourcing center for cheap labour or products, we have done a paradigm shift by shifting the nerve center of the business to Asia. Case in point is our integrated facility in North India. This facility acts as nerve center of our business and carries out the concept of TBO – Total Business Outsourcing. All the major functions like Sales, Marketing, Finance, Human Resources for our global offices are carried out from this nerve center in India. Only the essential physical tasks like warehousing and actual physical delivery of goods is carried in the respective countries.

NCS: Our strategy has been to operate in markets where there is substantial traction for our services. Outside of Singapore, our primary markets are Hong Kong, Australia and China; NCS Group experience in HK has been good. Although the market is relatively small, there is strong demand for our offerings. Hence, we have invested in larger office space after 5 years in HK, and we have also invested in hiring of permanent staff. We started with 5 staff when we opened in 1998 and we have more than 200 today.

In China, our Shanghai business has good traction amongst MNC clients, as well as with China’s local banks.

We have invested in large processing centres and application development and management centres in Suzhou and Chengdu, primarily because of good incentives given by the local state government in these cities. These processing centres serve our clients from Singapore, Australia, HK as well as China itself.

Our approach is to expand with the business. We are unlikely to build infrastructure or invest heavily ahead of demand.

ST Electronics: Being from the Asian region ourselves, our competitors for major regional system projects are mainly MNCs from Europe, USA and Japan. Being an Asian company operating in Asia we have a certain edge over foreign players as we are closer to these markets and will naturally be committed to these markets for a longer-term. For example in China, we have invested resources in terms of time, manpower and costs since the 1990s. We ensure that long and lasting relationships are fostered and strengthened year-on-year, yet results can only be seen when trust is developed among all parties. Our differentiating factor lies in our ability to understand customers well and provide a right solution to the customer. Customers trust our quality and particularly our ability to work with them in improving their service to their own customers. This is what we call our “Service Transformation” approach.

Q4: What is attractive and unattractive about doing business in Asia?

eSys: In terms of market potential Asia is the most attractive of the world economies today. Cost savings are still one of the factors when we talk about relocating business to Asia but not the only factor. Now businesses are being moved due to reasons such as availability if better skill sets. From socio cultural standpoint, expatriates may have some adjustment problems to the new social and cultural set up. But with integration and influence of global culture this problem is not as pronounced as it was few years earlier. This can also be tackled by hiring local talent.

NCS: Positives about doing business in Asia are:

a. Short distance between Singapore and these cities

b. Familiarity of culture

c. Liveable conditions

d. Language advantages, for example China, HK, Australia, and so forth

e. Affordable local manpower rates vs prices for services;

f. Market growth rates for the underlying business

Negatives are:

a. The prices are lower than the western markets in US and Europe. Hence, profit margin levels are lower. However, the Asian countries have good revenue growth potential.

b. The countries we operate in have a fair level of transparency within the various procurement processes. However, there are many other markets where procurement may be based purely on relationships rather than price and capabilities. Good management can overcome this.

ST Electronics: Although there are differences in culture and business practices, being Asian allows us to relate to the environment better as there is less adjustment required when dealing with the different norms as compared to if we were dealing with a totally different culture and norm from another region.

Q5: Tell us more about what you know and feel about the Asian culture. What have you observed so far about working with Asian customers, suppliers or associates? How important is it to know the Asian culture? Why?

eSys: Being a global company we try to understand and adapt ourselves to different cultures depending on which country we are working in. We have done the same in Asia. We have done this by hiring local talent which bring in the local perspectives, including cultural.

NCS: Being able to communicate in the business language of that country is very important. Customers feel comfortable when doing business, especially if you are just setting up in that country. Next, it is important to cultivate like-minded suppliers and partners for even if you don’t speak the language, you can rely on them to work with you in convincing potential customers. In essence, knowing the language is knowing the culture of that country.

ST Electronics: There is a need to invest time, effort and resources to develop longer term relationship with not only customers but also business partners and suppliers. Even within ethnic groups, practices differ from country to country and we must be mindful of cultural and business practices so as not to inadvertently upset our associates and customers. It is important to develop a strong and trusting relation with your working counterparts so that business is based on a strong foundation and conflicts are minimised or overcome.

Q6: People factor: how do you train, condition and equip your people before sending them outwards to new Asia locations?

eSys: Normally we hire local staff and that is applicable to all 33 countries where eSys has offices. We follow similar strategy in Asia. We have training programmes where in new hires spend time with local staff and functional experts to gain insights into local market as well as specific functional areas.

NCS: Our people are taught to be self-reliant from day one; starting up in a new country is very challenging for there are many unknowns that they will have to face. Having said that, they are aware of the different groups within the organisation that they can turn to when they need to. To motivate locally hired staff, we bring our staff programmes to the country.

ST Electronics: Staff sent to work overseas must be given the necessary support to ensure that their environment is conducive to help them perform their work well. Family support, proper housing and other amenities must be available so that they do not worry about their domestic issues. For training of such staff, it is critical that they receive the support and learn from the experience of all parties within the organisation. This will benefit them and better equip them for dealing with the business, cultural and environmental diversities.

Q7: What other advice, warnings and tips would you share to your global readers about investing and doing business in Asia?

NCS: We have always believed that Asian markets are susceptible to the management approach of ‘thinking local, but acting global’. We have natural advantages with our multilingual heritage – yet in certain Asian countries which are new to us, we also must be familiar with the local language, as it is also the prevailing business language. This is certainly the case with Korea, for example. So, it has always been our business philosophy to try to get locals from day one, as they are familiar with the local culture and business practices.

It’s often quoted that people make up organisations but less so on how people shake economies and shape countries. Given the natural constraints of small domestic market size faced by Singapore ICT companies, it’s not surprising that reserved yet fighting Singaporeans are forced to venture out to conquer new territories in the quest for survival. Foreign companies will reap much when they partner with these Asian conquistadors in shaping the New ICT World. I will interview more such Asian conquerors in future!


5 Aug 2006, View from Asia, fDi magazine, Financial Times, London.

US investments in Asia looks set to dramatically increase over the next 2 years. According to APEC, globally, three host countries—the United Kingdom, Canada, and the Netherlands—accounted for more than a third of the 2004 total position of US investments in Asia. Equity capital increases were largest in Asia and Pacific and in Europe. Given that Japan as the largest recipient of US investments and the share is only 3.9%, the upside potential is enormous if we factor in other now-growing Asia economies like China, India and ASEAN! US CEOs should re-examine Asia and increase their investments in this region to update their global country allocation and diversification portfolio. I feel that US companies should include more Asian countries in their Asia strategy for the following strategic reasons: low Asia market share of US FDI, Asian consumers emotive embrace of US goods, services and culture as well as a rising Asian workforce.

US Direct Investment in Asia

In 2004, Japan was the largest recipient of US direct investment. No other Asian country even came close.

Asia market share of US FDI is still low. A lot of Asian countries have still not reach maturity in terms of market share capture of receiving US investments.

US Exports to Asia

Biggest US 2005 exports to Asia were electric machinery, sound and TV equipment (22.4%), nuclear reactors, boilers and machinery (16.4%), aircraft and spacecraft (8.5%) as well as optic, photo, medical and surgical equipment (7.8%). The list of the top 10 US exports to Asia excludes the value of consumer goods and services, which may be captured in franchise revenues but excluded from export figures.

Asian consumers still warmly embrace most US culture, products and services, offering a big consumer market base. Asians prefer two Western location brands: US and Europe. However, from a national country branding standpoint, US companies need to pay attention to better differentiate themselves from their European competitors in order to better engage and connect with Asian consumers. Already, some European companies have outperformed their US competitors in several sectors.

Ask any Asian to think of a beer brand and they will mention a European brand like “Heineken or Carlsberg”, not a US brand like “Bud”. Anheuser-Busch, Miller Brewing, and Adolph Coors may be the US market leaders but not in Asia. Ask any Asian to think of a good passenger or luxury car brand name and they will say, “BMW, Lexus or Mercedes” but not Ford or GM. Not only do US companies have to contend with European competition, they now have to face-off with rising Asian competition as well, who are also attacking US markets while defending their Asian turf. Still, the US enjoys a slight advantage to capture an Asian heart and mind share. This must be heavily capitalised on.

Once the appropriate Asia market entry strategy is developed, feasibility and market research studies conducted, right human resources selected and trained, ‘Asianisation’ of US business practices done, and care taken to understand the Asian culture and potential partners, US CEOs’ Asia strategies and action plans stand a high probability of being properly executed and implemented.

2005 Exports to Asia Total

Asian workforce is rising. Consider the following factors: Asian executives and workers are spending more money and time to upgrade their higher education and technical skills. This inevitably means future increased productivity. Also, Asians earn lower wages relative to their American counterparts and have a higher propensity to work longer hours. Asia has no militant labour unions as the Asian culture is one used to submission to authority with strong leadership exercised in governments and employment.

US CEOs should consider outsourcing or moving some production to Asia.

The ‘Made in USA, Export to Asia’ mantra may have worked well in the past but the season has changed. The new mantra may well be ‘Made in Asia, Sell in Asia, Re-export to USA’.


29 Sep 2006, View from Asia, fDi magazine, Financial Times, London.

Growing Asia-Europe Investment and Trade Relationships

As recent as a decade ago, European investors have not accorded the same relative importance to developing Asia as have investors from the United States and Japan. That is beginning to change. In July 1994, the European Commission published “Towards a New Asia Strategy”, stressing the importance of modernising the relationship with Asia, and of properly reflecting Asia’s growing political, economic and cultural significance. Asia-Europe relations has been steadily growing and efforts are underway to promote two-way investment and trade flows between Asia and Europe. Ms Benita Ferrero-Waldner, European Commissioner for External Relations and European Neighbourhood Policy, said that The European Commission will continue to work with all parties concerned in the promotion of a closer Asia-Europe partnership. No wonder. Asia and Europe combined attracted 50% of the world’s FDI inflows in 2004 and contributed 52% of world GDP in 2005.

European Investment in Asia

In 1997, the European Commission reported that European investors then were seeking greater investment activities in Asia, with an initial focus on trading activities but with a willingness to undertake investment activities where necessary. Asia Investment in Europe With the exception of Japan and recently South Korea, Asian investment in Europe has been relatively recent. Most Asian investors are not actively seeking significant investment opportunities in Europe. They are more interested in obtaining technology and financing from European investors than in breaking into European markets. To achieve these goals, they are willing to enter into joint ventures with European investors. This atmosphere of Asians becoming more pro-active to invest overseas is starting to accelerate but cultural norms, values and habits still reign strong.

Both Hard and Soft Analysis are important

I cannot emphasise enough the need to build personal relationships alongside hard economic analysis of investment facts and data.

Let me cite you an amusing example in September. On an ongoing Asia FDI attraction campaign for a European IPA client, the investment office remarked that “a business trip to Singapore may occur only after a real business relation has been established based on a real common interest and comprehension of the needs, information and figures, and so on, because European confidence in business take more time for them than for Singapore people”. It beats me how you can do that without even meeting a potential partner face-to-face?

Compare that to another Singaporean company director who took time to personally fly to a different European IPA client’s location to scout around on a ‘gut-feel mission’ and talk to potential JV partners even before looking at the hard numbers. His company has several hundreds of spare millions of dollars, ready to do hard number crunching later and could invest anytime. Some Asian CEOs have remarked, “Within 15 minutes of meeting and talking to a potential JV partner, I will know whether this guy can be my good partner. There are plenty of rich CEOs and potential partners but some are not willing to work hard to make the JV a success. I must sense that my partners must share similar values, willing to commit to work hard and not be back-stage sleeping partners to get the business up and running and then we will do the hard numerical analysis and feasibility studies”.

We always advise our clients to not just solely depend on hard quantitative analysis (though quantifiable) but to take time to know their partners, feel there’s a heart-to-heart engagement and sometimes go by their personal sensing and gut-feel.

Another Asian airline director client, a former fund manager with no airline management experience, had ignored our advice to factor in soft analysis and feedback. He demanded just our hard quantitative analysis on an air travel market attractiveness study. He had wanted to invest millions of his company money, had listened to wrong people who were purely dependant on intellectual toolkits, not ‘on the ground’ and could not sense ‘in the heart’ and only wanted our objective data and could not accept market realities of the qualitative soft aspects of our interviewees comments and feedback on some issues. Thankfully, these are not representative of all the clients we face, as most clients are teachable and open to receiving advice.

Hard Factors: Economic stability, Productivity, Costs, Property, Local support services and networks, Communication infrastructure, Strategic location, Incentive schemes and programmes, Feasibility study, Cost-benefit analysis. We often advise our clients that these hard facts are good but not enough to justify investing millions of dollars. Also, they should look at the soft factors.

Soft Factors: Niche development, Quality of life, Professional and workforce competencies, Culture, Personal relationships, Management style, Flexibility and dynamism, Professionalism in contact with the market, Entrepreneurship, Gut feel, ‘I like the guy’ factor. We are after all humans. To solely depend on MBA-type cold hard quantitative analysis and information can quickly kill all the investment potential and returns. This is something that no government IPA investment officers can do on behalf of CEOs. Take the time to enjoy the different cultures, lifestyles and values of the target region and location. If CEOs do not have the time to do these personally, they should outsource some of these functions to external parties they can trust and rely on for their market insights and influence.

Private-sector Initiative

Hence, there are limits to what governments can do to facilitate and attract investments after they have addressed the twin pillars of the investment environment. Once IPAs have drawn up their investment policies and regulations as well as formulated and executed their investment promotion strategies, the onus still remains on the investing companies to decide to invest or not. CEOs of Asia and Europe do not necessarily listen to the vested interests of IPAs and they should listen to neutral sounding boards and third-parties.


28 Nov 2006, View from Asia, fDi magazine, Financial Times, London.

Small countries can be big – just woo Asia SMEs in a big way!

Mr Joo In Tae (friends call him “IT”), CEO and President of South Korea’s CS FiberTech, was sitting opposite me at Seoul’s famous SamWon Garden, a small Korean BBQ restaurant. His company is an SME (small medium enterprise), producing polyester and nylon draw textured yarn for the last 50 years. Although having only 47 employees, CS FiberTech generates US$40 million in annual revenue, owns a small office building and creates jobs for people, a marketplace model corporate citizen. IT and I were discussing his company’s global investment plans especially in El Salvador, a small Central American country. Not many Asian CEOs have heard of El Salvador, let alone know that it offers competitive advantages like speed and access to the North American market, a dollarised economy, attractive investment opportunities in sectors like textiles, electronics, autoparts, logistics, call centers, public infrastructure and agro-industry, an excellent telecommunications infrastructure and qualified labour.

Mr Joo said the biggest reason they are investing in El Salvador is the DR-CAFTA which gives them many advantages. Also, the competitive threat from China, India, Indonesia and Pakistan was severe to Korean yarn producers like themselves. They needed to find a way to grow their company and hence the search for an alternative location. With South Korea facing oversupply and El Salvador facing good demand for its yarn products and offering good investment incentives, the opportunity to invest there was too good to pass up.

When asked about other Asia countries like Vietnam or China offering cheaper wages and closer distance, Mr Joo said, “Labour costs form only one cost component. DR-CAFTA’s cost advantages more than compensate for the cheaper Asia wages. Besides, El Salvador offers a big market close by – the US”.

In Asia, SMEs provide 70% to 80% of national employment with big MNCs and governments providing the rest. Asia SMEs spend much of their time growing their domestic businesses and sometimes are ignorant of better pastures overseas. Armed with good overseas market information, the few Asia SMEs who dare to venture beyond their crowded shores stand a better chance of survival and growth than coping with national and regional business landscapes.

One factor which causes Asia SME CEOs to shun investing overseas is lack of information or wrong information, often unknowingly spread through fellow investors who got burnt and then returned back to their home countries saying how difficult overseas investing can be. An Asian government’s SME association client remarked, “The CEO of one of our SMEs on listening to a glowing presentation about Singapore immediately partnered with a local company they were not familiar with, invested in a factory and expensive office and within months, it was all a mess. Please help them”. Sadly, this could have been easily prevented with better market information and getting insights from the right source.

Several big associations I had met in Seoul often provided wrong information about overseas investment climate. This is an even bigger problem, for SMEs often look up to their chambers and association leaders for advice. Hence, there is a need for better market information and education to avoid missed opportunities.

Seed countries serve seed companies

A good advice for economic development or investment promotion agencies of small countries is to always start small. Seed countries should not neglect to serve small companies. Big companies can afford to choose and invest in bigger countries due to a different investment location requirement and host country offerings. Occasionally, a small country will receive medium (bush-size) or big (tree-size) investments but these may not be the norm. Wise SMEs who look for pockets of overseas investment opportunities, analyse these closely, take calculated risks in several locations, bring the right people on board and who patiently work at giving excellent product or service offerings will in time grow to be big. The small host countries who had initially welcomed them will be blessed in turn, for having been faithful in serving the needs of small companies. One common problem is short-term thinking and impatience, not looking beyond short-term hard metrics like the number of confirmed investment leads generated within 3 months. Good SMEs won’t remain small and medium forever. Hence, the strategy of attracting SMEs should be formulated differently from the usual MIGA-style methodology and not adopted or copied verbatim.

Don’t despise the day of small beginnings – acorns can turn into oak trees!

Many a time, the Asian CEOs of small companies now turned big and successful will remember ruefully the early days when they were snubbed and ignored by their own bigger Asian host countries but warmly embraced by smaller foreign countries. That’s Asia’s loss and another government’s gain. For every big Asia company being wooed by many other bigger countries, a small country can also consider attracting several hundred smaller Asia investors. That’s also a good investment promotion strategy!


26 Jan 2007, View from Asia, fDi magazine, Financial Times, London.

Growing Asia Economic Regionalism and Growth as Drivers for Outward FDI

As I feverishly worked over the last quarter past the 2006 festive season non-stop till end January 2007, made site visits across Asia, researched and made final recommendations on our market investment feasibility studies for our clients, one thing just hit me – the current batch of client projects have all been outward investments involving an investment value of at least US$40 million per project! Be it an Asian gaming client wanting us to prepare a feasibility study to list in a European stock exchange, an Asian corporate airline wanting to expand into Asia, an Asian power company with 2 other partner companies wanting to expand its regional market, an Asian broadband client wanting to expand its Asian digital media market, or an Asian brewery wanting us to check out Thailand during the bombings (and not sparing a thought for us physically-challenged consultants), these Asian companies all seem so teeming with new-found enthusiasm, ready to burst from day one of 2007! With cash lined up, they asked one very important question: how feasible is my target market for us to invest in 2007? How best can we enter or expand? And Larry, we don’t have 3 months for you. We want to invest quick and you’ve got 8 weeks max to do your stuff!

Sigh! I pondered over my options: dump these clients, jack up our fees, or think about good things instead. I chose the latter and started to wonder if the tide will turn favourably for Asia in 2007, transitioning from economic malaise to revival. Here are some Asia developments. From a macro, top down perspective:

• The APEC Committee on Trade and Investment’s (CTI) has in 2006 already undertaken work on the following key areas: Trade Facilitation; Investment, Support for the Multilateral Trading System; RTAs/FTAs; Transparency and Anti-corruption; Digital Economy and Strengthening Intellectual Property Rights. As a specialist Asia Trade and Investment consultant, this is heaven! Market Access Group (MAG)

• Trade and Investment Division (TID) of UNESCAP back in 2005 reported that Asia Pacific had 36% of the world’s RTAs in force (62 compared with the world’s 170) and 17% of the world’s Bilateral agreements (39 compared with the world’s 234). Then, there were more than 80 BTA and RTAs at various stages of the negotiation process. The Asia Pacific region has thus seen an explosion of various forms of preferential trading agreements (PTAs). TID reported that this surge in the number of various RTAs led to Asia and the Pacific region starting to assume the “spaghetti bowl” look of the European Union or (to a lesser extent) the Americas. See diagram.

A multilayered Asia Pacific constellation is thus emerging, made up of a dominant hub-and-spoke arrangement with substrata of other hub-and-spoke arrangements in which smaller economies may be trying to establish alternative hubs.

• UNESCAP also forecasts that the Asia-Pacific region is poised for impressive economic growth in 2007 at a strong 6.9 per cent GDP growth, driven by the rising economic powerhouses of China and India and the continuing revival of the Japanese economy.

• UNCTAD in its World Investment Report 2006 reported that for South Asia, East Asia and South-East Asia, and Oceania, they are experiencing soaring inward FDI and intraregional FDI with overall decline in outward FDI flows though flows from China have surged. West Asia is experiencing unprecedented rise in inward FDI while petrodollars have boosted investment in outward FDI.

From a middle-level perspective, some national governments seriousness to attract Asia FDI:

• The Canadian Government is heavily interested to attract Asia companies to Canada. The Minister of International Trade Mr David Emerson has indicated that as Asia consistently represents less than 2 percent of inbound FDI into Canada, Asian countries like China, Japan, Korea, India, Singapore and Indonesia must become more active focal points for trade policy attention. (At time of print, we are waiting for a Canadian provincial government to appoint us as its Asia representative to facilitate both trade and investments between Asia and its province).

• Our work for some Latin America governments to attract Asia outbound FDI with Asia investor lead generation services to coincide with its Presidential visits. From a micro perspective, companies’ outward investments, especially intra-Asia. • UNCTAD also reported on the continuing South-South intra-region investments. • Our experience with Asia investor lead generation and location consulting is that about 60% of Asia outward FDI flows is within Asia itself. These Asia CEOs cite reasons like Asia offering big attractive markets, having a ready labour pool of inexpensive workers, short travel distance to expedite logistics, excellent infrastructure, Asians having knowledge of Asia and non-militant unions.

Asia’s Rising Consumer Class and Personal Disposable Income

Asia has 3.96 billion people in 2006 with big economies like China, India, Japan and ASEAN providing a big middle class base of consumers. As Asia’s consumer class consume increasing amount of goods and services, especially Asian ones, this spending feeds the Asian companies they work for who in turn prosper, paying the Asian employees more. Hence, the wages of some Asian labour has been increasing, forcing investors to re-consider cheaper alternative locations like Vietnam and Cambodia instead of Chindia (China and India) and Indonesia.

Rising Asian household and personal disposable incomes generally translates into improved living standards and provide a strong basis of economic revival, starting with the smallest unit, the family. With Asia containing more than 60% of the world’s human population, think of the effect of just an increase of one dollar into almost 4 billion people overnight: that’s right. 4 billion dollars pumped into the Asia economy.

Asia’s Secret Weapon: their Poor

Having money answers many problems and reduces social tensions. Poverty is indeed a curse that needs to be continuously addressed and reduced. I like what Dr Prahalad wrote in his book, “The Fortune at the Bottom of the Pyramid (BOP): Eradicating Poverty Through Profits”. Once more businesses are convinced that the micro-BOP segment does indeed offer good profits if their goods and services serve the BOP needs, the BOP segment will sow into these businesses with their micro spending. This creates a magnet for more and more businesses to serve the BOP, attracting supporting businesses. In turn, the BOP gets more job employment due to the lower technology involved (with lower consumer sophistication). More BOP jobs with micro credit financing for mini entrepreneurs mean one big way to alleviate poverty.

Of the 690 million extremely poor people in developing countries of Asia, 93 per cent are in India with over 80% of Asia’s poor living in the countryside. Businesses should re-consider this oft-ignored segment and check out opportunities to miniaturise their services like cheaper IPPs (independent power plants) to serve the rural areas, export of cheaper just-turned obsolete or slightly-blemished goods to these areas, low-charging entertainment establishments and other creative goods and services not yet thought of.

Some of our clients get their millions in revenues by serving the BOP with goods priced in cents, not thousands. I bet you didn’t know that 60% of the Phnom Penh population has cell phones. Ha! It’s good not to ignore the latent BOP gold and be a contrarian to avoid the herds. Just think of the potential potent Asia BOP market size and the effect if will have on Asia’s economic revival once this 690 million people slowly climbs out of poverty. The businesses which can patiently unlock the purses and wallets of Asia’s poor and serve them well will themselves be blessed. Who knows? One of the poor customers you serve now may well become the likes of Mr Mochtar Riady, the billionaire who rose from poor circumstances in Jakarta to become a highly successful executive at the private Bank Central Asia before founding his own empire the Lippo Group which has assets worth billions. Serve the poor well and your own business might well be enjoying future revivals!


21 Feb 2007, View from Asia, fDi magazine, Financial Times, London.

Asia’s consumer base is big

Asia contains more than 60% of the world’s human population, with 3.96 billion people in 2006 and over 600,000 communities and numerous subcultures. Economies like China, India, Japan and ASEAN provide a big middle class base of consumers. Companies are constantly thinking of ways to extract more profits out of this diverse and big regional market. Among the richer economies like Singapore, the top consumer expenditure items are transport and communication, rent and utilities, food and beverage, and leisure.

Asia’s private consumption expenditure: now declining but expected to grow in medium term

The IMF reported that consumption as a share of GDP in emerging Asia is low by international standards and has been declining for some time. This is due to increased precautionary savings caused by the Asian crisis, reduced economic growth, limited social safety nets, population ageing and tightened domestic bank credit.

However, the very same set of factors which have caused decreased consumption are beginning to change. Increasing number of workers is expected to retire and consume out of their savings. Consumers have become less cautious in the wake of the Asian crisis. Ongoing banking sector reforms like improved risk management systems can develop household credit instruments. These potentially can reduce precautionary savings in the medium term around 2015, as households would be less likely to save for emergencies.

Infrastructure improvements can also grow private consumption expenditure

Consumption of durable goods and services depend on the availability of infrastructure like roads, electricity, telecommunications, and health services. Indonesia, China, India and Philippines are below global average now. (Source: Global Competitiveness Report 2003 – 2004, World Economic Forum)


16 May 2007, View from Asia, fDi magazine, Financial Times, London.

According to UNCTAD’s World Investment Report 2006, FDI inflows to South, East and South-East Asia, and Oceania reached a new high of US$165 billion in 2005. China, Hong Kong and Singapore remained the top recipients of inward FDI in 2005.

FDI inflows to SE Asia increased to US$37 billion, a 45% increase in 2005. There are signs that investments into South East Asia (SE Asia) will continue to grow. This 45% growth of SE Asia came at some expense to China in terms of percentage growth. China’s inward FDI grew relatively lesser at 19.5% to US$72.4 billion. In 2005, China’s non-financial FDI alone was US$60 billion, registering a slight decline after five years of increase. Hence, the SE Asia region’s inward FDI growth has narrowed the gap with China.

Attracting FDI is very important to Asia economies. The importance of the SE Asia region in the world economy and its high economic growth rate have enhanced its attractiveness to investors seeking to expand markets and reduce costs. Asia offers attractive big markets as it contains more than 60% of the world’s human population, with 3.96 billion people in 2006 and over 600,000 communities and numerous subcultures. Also, Asian economies naturally provide large pools of fluent middle class consumers.

Aggressive conquistadors are always on the prowl looking for fresh market opportunities in Asia except that his time round, they will meet their match with world class competitors from Asia itself sharing the same hunting grounds in Asia.

The highest growth in FDI inflows in South, East and South-East Asia was recorded in a number of member ASEAN States such as Cambodia, Thailand and Indonesia. FDI inflows into Thailand rose from US$1.4 billion in 2004 to US$3.7 billion in 2005, and those into Indonesia grew by 177%, to US$5.3 billion. Large cross-border M&As, such as the acquisition of Sampoerna (Indonesia) by Philip Morris (United States), accounted for the growth. The implementation of structural reforms in Indonesia during the past few years has strengthened its economic fundamentals and therefore helped enhance investor confidence. Also, SE Asian investment promotion agencies have improved in their FDI strategy development and execution, committing more funds for location branding and investor lead generation efforts.

Market inefficiencies and obstacles to investments cannot be adequately addressed by governmental public administration alone nor even with slick national location branding campaigns from investment promotion agencies. Legislation and investment rules or incentives cannot dictate nor heavily influence human characteristics and attitudes like greed, corruption, inability to even afford basic bus transport from poorer rural provinces to town schools to receive education, etc. The private sector needs to take the lead to assess market feasibility, identify investment opportunities, explore ways to legally work around market inefficiencies and ensure that their own companies have the necessary human resources, both from parent company location and Asian subsidiaries to manage their Asian investments.

Managing investor perceptions will be a key challenge for SE Asian investment promotion agencies (IPAs) as well as tech parks and industrial site operators. Foreign investors have the whole globe to consider investing in. As such, crafting both the regional SE Asia attraction message and country positioning message are equally important, not at the expense of each other. Also, communicating to intra-Asian investors compared with non-Asian investors need to be managed. Too often, IPAs and site marketers develop only one common standard set of communication tools and marketing collateral although available in different languages. They do not realize that developing different regional versions may work wonders to increase the success rate of attraction. Brands, icons, colours, associations all command different impacts and meanings to investors from different cultures.

A second challenge for SE Asian IPAs and site marketers is to retain and strengthen investor loyalty. Many companies now face increasingly impatient boards of directors and investors who demand a shorter ROI period. This suggests a more regular and continuous stream of knowing current investor satisfaction levels and exercising better investment after-care services.

A third challenge for SE Asian IPAs and site marketers is to engage in gathering pro-active location competitive intelligence. Competing locations now revise and enhance their location offerings frequently. Investment incentives change often especially with reduction in corporate taxes being offered like price wars.

“Chindia” and intra trade trends

China and India will see more segments of their mega consumer markets becoming more affluent. This would stimulate demand for more foreign products and services like luxury, entertainment and fashion products, golf courses, resorts, spas, higher education and the like. Intra regional air travel, logistics, trade and tourist flows will grow. I expect to see China and India transform into twin mega markets with the surrounding economies playing more of a support function. More Chinese and Indian products and services will begin to enter SE Asian markets. More SE Asian companies are expanding beyond their traditional home markets into Chindia and within SE Asia. Other than contrarians, North America and Europe may become less important to SE Asian companies in the medium term as they focus now on expanding into the mega Chindia markets nearer towards home.

Alongside these inward FDI attracting activities, trade promotion agencies (TPAs) will thus play increasingly important roles. SE Asian TPAs have to consider how best to assist their local companies to enter overseas markets and to develop export strategies to maximise exports of their local products and services, especially since China and India are fast becoming mega Asia markets with a rising middle class.

With such major structural changes, not even IPAs, TPAs and site marketers by themselves are able to handle the impending changes, flows in both investments and trade as well as the increasingly complex needs of corporate investors with shorter time planning cycles, ROI payback time and other investment criteria.


29 Jul 2007, View from Asia, fDi magazine, Financial Times, London.

There is no global standard definition of an SME. Some indexes are used to define SMEs by way of number of employees (most common), production capacity, fixed assets, shareholders funds, and sales volume.

In China, medium enterprises employ between 101 to 500 employees. In Singapore, SMEs providing services employ less than 200 employees. In USA, manufacturing SMEs employ less than 500 employees. A University of Wollongong study reported that SMEs play a larger structural role in Taiwan, China, Japan, Thailand and Vietnam where they contribute over 70 percent of employment, than they do in Indonesia or Malaysia where they contribute only around 40 percent. In addition, the contribution of the SME sector to exports, and hence the extent of their global integration, also varies widely. They are relatively more export oriented in China, Korea and Taiwan than they are in Japan, Indonesia, Thailand, Malaysia and Singapore.

On 8 March 2007, APEC Ministers and their representatives responsible for 21 economies met in Hobart on 8-9 March 2007 for the 14th APEC SME Ministerial Meeting. Ministers agreed that SME growth would be stimulated by:

(a) reducing transaction costs and red tape imposed by governments, such as making it easier to start and grow a business;

(b) encouraging innovation;

(c) saving time for SMEs, for example encouraging the use of e-commerce and online transactions with government;

(d) better understanding and management of intellectual property rights; and

(e) encouraging SMEs to consider internationalisation.

In this article, we focus on internationalisation and try to understand a typical Asian SME boss’s mind.

I interviewed Ms Elim Chew, Managing Director of Singapore’s 77th Street, a street wear retail fashion chain serving the hip and trendy youth culture segment with street wear fashion. Some of Elim’s achievements include being named the “Most Promising Woman Entrepreneur” by The Association of Small and Medium Enterprises (ASME) in 2001; winning the “Mont Blanc Businesswomen Award” in 2002; and most recently, being awarded the “Young Woman Achiever Award” by Her World. She was also awarded the “Leadership and Mentoring Award” by Research Communications International. This award was also supported by The Association of Small and Medium Enterprises (ASME).

Under the guidance of Elim, 77th Street became the first fashion retailer to win the prestigious “Singapore Promising Brand Award”, “Most Distinctive Brand” 2004 conferred by ASME and Lianhe Zaobao.

LY: What is driving your Asia investment and expansion? How important is Asia to you?

Elim: Asia is a fast growing economic powerhouse especially in China and India. Most other Asians countries are also enjoying surging economies and thus it made sense to tap into the Asian Markets.

As of now, we have a shopping mall in Beijing called 77th Street Plaza all poised for the Beijing Olympics next year. We plan to duplicate this concept in other parts of China and India and also to appoint franchisees in Asian countries.

LY: What are your company’s strategic intent when investing overseas?

Elim: The intent is to spread our retail outlets and malls with the concept of youthful vibrancy. We will certainly welcome co-opetition and strategic alliances with anyone who have synergy with our vision.

LY: How would you explain your company’s general approach to Asia investment? How is your Asia investment experience?

Elim: the planning of investment will be largely focused on the return of investment. Our Asia experience was a steep learning curve initially. However I am happy to say that the learning curve is almost over. That is not to say that there are nothing else to learn. Things are dynamic and in a constant flux.

LY: What is attractive and unattractive about doing business in Asia?

Elim: Attractiveness is that the market is huge the potential is astronomical. Cost of doing business is also low in many countries although they are rising rapidly in the faster developing cities. The downside, learning curve is also huge and in some countries, the rule of law is blurred and this can make business decisions guess work.

LY: Tell us more about what you know and feel about the Asian culture.

Elim: There is no single Asian culture. They are complicated and differ from place to place.

LY: People factor: how do you train, condition and equip your people before sending them outwards to new Asia locations?

Elim: We rarely send Singaporeans to other locations as the thinking is that the locals know their own market and psyche better.

LY: What other advice, warnings and tips would you share to your global readers about investing and doing business in Asia?

Elim: The usual which you learn in business schools. Plan, plan and plan and then execute the plan. Then tweak it until it becomes a success formula.


1 Oct 2007, View from Asia, fDi magazine, Financial Times, London.

Before the 1990s, FDI was concentrated in the industrial, financial and oil sectors, much of this coming from the US. From the late 1990s, however, services became the destination for FDI and Europe replaced the US as the leading source of FDI.

According to UNCTAD, investing abroad is still a relatively recent phenomenon for many Asian firms. They tend to focus on intra-regional FDI. Asian economies had only just begun to build up their outward investment stock when they were struck by financial crisis in 1997. Asian newly industrializing economies have recently become relatively large investors abroad. Asian developing economies invest almost as much in manufacturing as services. Services FDI is mainly in trade-related activities and financial services. Asian investments have been growing in all major regions, but still remain concentrated mainly in Asia.

However, Asia’s economic Marco Polos are increasingly exploring further away from ASEAN to the far corners of Asia and other parts of the world. Asian FDI is assuming greater importance, accounting for 10 per cent of the stock of FDI in the world. Some Asian firms have grown to rank among the top transnational corporations (TNCs) in the world. This trend is likely to be reinforced in the future. The rapid economic growth and industrial upgrading currently taking place in Asia provide ample opportunities for regions to attract Asian FDI into both natural resources and manufacturing. Asian SMEs have also become an important source of this new outward FDI, as more of them need to invest abroad to maintain and improve their competitiveness.

Outward FDI from South-East Asia or ASEAN member states has been led mainly by Malaysia and Singapore.

Since the early 1980s, China’s policies on outward FDI have evolved, moving towards a more transparent and proactive policy framework. In the late 1990s the central Government began encouraging outward FDI and launched the “going global” strategy. A series of incentive measures accompanied the strategy, such as easy access to bank loans, simplified border procedures, and preferential policies for taxation, imports and exports. Bilateral investment treaties have been another facilitation measure adopted not only to attract FDI but also promote better protection to Chinese companies investing abroad. The country has signed 117 bilateral investment treaties.

Policy makers and politicians can consider policy reforms and initiatives to help attract more FDI from Asian economies. Most FDI promotion measures tend to target large transnational corporations (TNCs), thus missing out on the various strengths and advantages that SMEs may be able to offer to host countries.

Outflowing Asia FDI may have been limited to date partly because of lack of knowledge among Asian investors about investment opportunities. This is largely so in our Asia investor lead generation work for our government IPA clients. Hence, a large portion of our work has been to educate Asian investors about these opportunities.

Another reason for the limited outflowing Asia FDI partly due to bureaucratic impediments. UNCTAD suggests that policy reforms for attracting FDI from Asia should be considered. These may include expediting visa granting procedures, provision of serviced land and/or factory shells, strengthening investment promotion activities abroad, introducing wage policy reforms and seeking solutions to problems associated with being landlocked.

Possible regional initiatives to promote FDI could include reducing non-tariff barriers, improving regional infrastructure and avoidance of a regional race. In addition, I suggest that IPA staff be trained to think ‘long term’. Some developing countries may come under pressure to find quick incoming Asia FDI within one year. However, it may require a time period longer than one year to woo Asian investors to invest outside Asia since they need time to conduct further feasibility studies, site visits, search for business partners, modify business models to adapt to local context and to train their staff before sending them overseas.

In the New Public Management (NPM) management philosophy, increased market orientation in the public sector may lead to greater cost efficiency for governments. Investment policy reforms are thus needed to enhance such market orientation while engaging in more public-private partnerships (PPPs) to use more private sector players like FDI consultancies to attract FDI inflows and jointly formulate FDI strategies or even city marketing. Critics of NPM embrace digital era governance and herald digitalization (exploiting the Web and digital storage and communication within government). This seems to suggest that ‘governments go digital’ can do wonders in attracting FDI. However, these NPM critics forget that in business, CEOs’ investment decisions cannot be fully persuaded by digitalization alone or by civil servants alone. Digitalization cannot replace the soft side of relationship-building and liking of potential partners.

With many Asian firms just venturing abroad to invest, the Asia outflowing FDI curve can only grow upward. Savvy IPA staff would benefit much by reforming their FDI policies and using more Asian private sector expertise to attract the increasing flood of new Asian FDI.


5 Dec 2007, View from Asia, fDi magazine, Financial Times, London.

Asian companies are expected to seek out investment opportunities in tier 2 and even tier 3 Asian cities in intra-regional FDI as they invest almost equally in both manufacturing and services due to increasing competition. More knowledge-based investment activities will also grow.

I expect Asian FDI to assume greater importance to account between 12 to 15 per cent of the global stock of FDI compared to the current 10 per cent. More Asian firms will grow to rank among the top transnational corporations (TNCs) in the world due to rapid economic growth and industrial upgrading. Outward Asian FDI will continue to focus on both natural resources and manufacturing with more Asian SMEs becoming a part of this new outward FDI, spurred by policy reforms reducing red tape, favouring domestic entrepreneurship and the need to invest abroad to avoid competition and to improve their competitiveness. This Asia outward FDI growth will continue till 2009.

Asian companies, other than wanting to enter new markets, will also try to obtain technology and financing from foreign investors. To achieve these goals, they will need to enter into joint ventures with foreign investors.

Outward FDI from ASEAN, traditionally led mainly by Malaysia and Singapore, will see more action coming from North Asia.

London will continue to be a springboard into Europe for Asia FDI but London’s favored location dominance will be increasingly challenged by tier 2 European cities as well as Eastern Europe. Within North America, I anticipate that more Asia FDI will seek out investment opportunities in selected Latin American countries as a manufacturing and export springboard into North America.

With China signing 117 bilateral investment treaties, I expect outward China FDI to increase further.

Asia-based private equity funds are likely to help Asian companies internationalise by performing more aggressive roles of venture capital, partner with third parties to analyse special situation plays like value unlocking arising from one-time expansion opportunities and thirdly in selective buy-outs. Most Asian companies, except for the huge conglomerates or government-linked companies, tend to acquire significant portions or a majority control in a more mature but smaller to mid-sized company. I foresee a future trend whereby banks and financial services companies will partner with location consultancies in offering joint location services with the former providing funding and the latter providing location research, feasibility and partner search studies. Thus, location consultancies will play an increasing role in Asia as well.

I expect more investment promotion agencies (IPAs) to intensify their location marketing efforts to address the lack of knowledge among Asian investors about investment opportunities.

As for inward FDI into Asia, I see more Asian IPAs implementing additional investment promotion activities abroad with Asian governments reducing non-tariff barriers and improving regional infrastructure. Asian governments are expected to enter into more public-private partnerships (PPPs) to attract FDI inflows and jointly formulate FDI strategies.

Other than West Asia, I expect the rest of Asia to remain the world’s most favored regional location since Asia offers attractive locational advantages like economic stability through improving GDP, growing market size and potential, improving infrastructure, relatively low labour, operating and taxation costs as well as increasing growing labour productivity and technological capabilities. Besides these hard attraction factors considered during investment feasibility studies, investors will also be enticed by Asia’s soft factors like growing tourism and social attractions.


25 Jan 2008, View from Asia, fDi magazine, Financial Times, London.

Branding a nation, location or city in Asia is not just advertising. AsiaPac cities must develop a global reputation of creating and adding value and yet concurrently command emotional resonance as part of their unique selling proposition. Those which do not invest enough to build the relevant and visible brand equity will not be effective to attract investors, businesses, tourists or new talent-residents.

In an increasingly-networked world, news of US economic slowdowns can immediately affect Asian economies. Likewise, news of a country leader being assassinated like Pakistan’s Bhutto can undermine investor sentiment overnight. Asian country, city or location marketing is thus dynamic and not static. In locations which constantly experience great uncertainty and investor perceptions of high risks, investment promotion agencies and city council managers can no longer depend on their static, annually-developed Asian FDI strategy. Like stock market value, Asian locations’ brand value can literally be wiped off overnight since value includes an investor’s knowledge, feelings and perceptions about a location.

Also, more independent third parties are giving out more category awards, lending to the already-complex country brand management in Asia with over 600,000 communities. It is highly conceivable that global investors will one day face ‘country award or rating fatigue’ syndrome. When a location potentially showcases its 9 awards won from 6 different third parties, much like how a dining outlet brandishes its awards in front of potential diners, the potential new investor will tend to devalue such ratings and awards and hence the country branding or marketing may lose some effectiveness to attract new investments.

How then does an Asian country marketer market and brand its location more effectively in such times of quick change? Some elements of location or place marketing techniques can be considered.

The bigger tier 1 AsiaPac countries, being less prone to changes and are more stable, can adopt an umbrella brand with consistent messaging. Locations with a national leader who enjoys a positive image can still use the classical top-down, brand-building strategies and usual marketing management like clarifying unity of purpose of sub locations, establishing SMART objectives, giving of authority over inputs and sending country marketers to receive marketing techniques.

Smaller tier 2 or even 3 AsiaPac countries can explore a niche branding or cultural branding strategy consulting marketplace and citizen opinion leaders in wholistic overview when developing a marketing campaign.

All locations can benefit by using more Internet or website marketing since this can quickly capture external changes and reach out to a wider audience at lesser cost compared to print or TV advertising. In most of our AsiaPac investment promotion consulting for foreign governments, some AsiaPac locations or city councils do not even have English websites or accessible email addresses or contact details. It is a pity that the lack of attention to such minor details can result in reduced location awareness, contact and needed FDI.

A location marketer must also know how to choose and use a brand consultancy, since most of these brand consultancies are competent in branding only products for their corporate clients. Their location branding usually do not form part of an overall investment promotion expertise unlike dedicated investment promotion consultancies with investor lead generation, investor retention after-care and relationship building services.

All AsiaPac location marketers must accept that they are not product marketers who enjoy a greater degree of internal control. Unlike a product which can be easily modified or withdrawn from the market, a location may suffer from long-term image problems arising from structural problems which can take years to address. For such cases, continuously working with private investment promoters in investor lead generation and engaging in direct marketing may be the best ways for location marketers to attract new investments while giving good after-care and continuous monitoring and evaluation to retain or expand existing investments.


19 Mar 2008, View from Asia, fDi magazine, Financial Times, London.

ASEAN Economic Ministers (AEM) are working to achieve the ASEAN Economic Community (AEC) by 2015 to achieve the broader goal of the region becoming a single integrated seamless market and serve as an international production base. Global businesses should begin their business planning to prepare for this economic integration as ASEAN economies become more interdependent. To enable free flow of goods, reduce transaction cost and the cost of doing business in ASEAN, initiatives include trade facilitation, improved logistics, cooperation in customs as well as transportation and communications. Trade among Member Countries is expected to expand. Implementation of such initiatives will also enhance ASEAN’s attractiveness as an FDI and tourist destination.

The Framework Agreement on the ASEAN Investment Area (AIA) signed on 7 October 1998 contains one important FDI measure: immediate opening up of all industries for investment, with some exceptions (manufacturing, agriculture, fishery, forestry, mining and services) as specified in the Temporary Exclusion List (TEL) and the Sensitive List (SL), to ASEAN investors by 2010 and to all investors by 2020. AIA Ministers at their Meeting in September 2003 agreed to work out the scope of expanding the AIA to include services (such as, but not limited to, education services, health care, telecommunication, tourism, banking and finance, insurance, trading, e-commerce, distribution and logistics, transportation and warehousing, professional service such as accounting, engineering and advertising).

What then are the business opportunities?

There is a need to develop hard and soft infrastructure support facilities and services which businesses can meet in sectors like agro-industry, natural resources, tourism, transport, infrastructure and ICT. Critical are the air, sea and land transport logistics, ICT, and human resource development that can promote increased cross-border flow of goods and people to, from and within the region.

In food, agriculture and forestry sectors, the ASEAN Secretariat identifies cooperation areas like food security, food handling, crops, livestock, fisheries, agricultural training and extension, agricultural cooperatives, forestry and joint cooperation in agriculture and forest products promotion scheme.

In telecommunications and IT, businesses can meet needs to promote interoperability, interconnectivity, security, integrity, as well as construction and development of information infrastructure such as fixed/mobile communications networks, multimedia applications and Internet in ASEAN Member Countries.

Financial institutions can explore opportunities in rural and SME financing to promote SME activities and rural enterprises as well as develop tighter security measures against terrorist financing and money laundering.

Media, public relations, and communications practitioners can also provide their services to promote sub regions and to deliver business and other news on sub regions.

In the transport and communications sector, air transport service operators can jointly invest in and develop air commuter service operations in air alliances to develop cheaper air transport services to, from and within sub regions, especially in the routes that are not currently being serviced by any airlines or where the present supply of air services is still lacking. Businesses can also participate in regional activities to improve multimodal transport linkages and interconnectivity, review investment feasibility in the liberalisation in the air and maritime transport services, and further improve integration and efficiency of transport services and the supporting logistics systems.

Intellectual property (IP) and IP Rights (IPR) creation, commercialization, and protection in ASEAN remains important as the region work towards establishing a regional trademark filing system.

In the energy sector, opportunities exist to enhance energy security in ASEAN and in developing infrastructure, including energy facilities such as power stations (including rural and urban electrification), oil and gas pipeline network by using concessional loans, other schemes or private finance.

In the tourism sector, competency standards for restaurants, bars, housekeeping, tours and travels are being developed. This will increase regional confidence in tourism training outcomes and qualifications which will in turn stimulate intra-regional investment and flow of human resources in the sector.

Finally, in the services sector, ASEAN is developing Mutual Recognition Arrangements (MRAs) on trade in services. MRAs enable the qualifications of professional services suppliers to be mutually recognised by signatory member countries, hence facilitating easier movement of professional services providers in ASEAN region. MRAs have been concluded for Engineering Services, Nursing Services, and Architectural Services. A number of other MRAs in other areas are currently in different stages of negotiations, which include Accountancy, Medical Practitioners, Dental Practitioners, and Tourism. Businesses which are aware of the establishment of the ASEAN Economic Community (AEC) by 2015 and actively planning, committing and preparing themselves now will doubtless reap much of the harvest post 2015. This is the season to conduct in-depth market studies, feasibility studies and formulation of ASEAN market entry strategies.


16 May 2008, View from Asia, fDi magazine, Financial Times, London.

The Black Death (bubonic plague) with rodents as reservoirs of infection started in central Asia. It first spread to Europe, striking port cities and then followed the trade routes, both by sea and land. From central Asia, it was carried east and west along the Silk Road, by Mongol armies and traders making use of the opportunities of free passage within the Mongol Empire. The plague was reportedly first introduced to Europe at the trading city of Caffa in the Crimea in 1347. It then spread the first outbreaks in China, striking the Chinese province of Hubei in 1334.

Baby Boomers and some Generation X will remember playing Dungeons and Dragons (D&D). Now, the new D & D is Disasters and Diseases. Recall that SARS struck in 2003 while the Tsunami disaster struck on 26 Dec 2004.

With alarmingly increasing frequency, one now often read of Asia disasters and diseases: China earthquakes with death toll above 20,000, Myanmar cyclone which has left around 62,000 dead or missing, dengue fever in Singapore, Sri Lanka flash floods displacing thousands in war-torn area, 208 human deaths caused by the Asian bird flu, Vietnam bird flu outbreak spreading to Hanoi, and a drought which forced more than 10,000 Australian farmers off land. These alone occurred from March to May alone this year.

How will such events affect Asia’s business and investment climate? Foreign investor sentiment and confidence may be reduced. Business costs may increase due to spiralling employee healthcare, delays in logistics and transport infrastructure slowdown. Disasters will also reduce power supply, capacity and transmission, natural gas supply, and adversely affect telecommunication networks. In densely populated Asian cities, diseases will also affect employees’ ability to produce goods and services.

If we magnify the disaster effects on a bigger scale in big countries like China and India (concurrent markets for natural resources, raw materials and customers), Asian businesses might find it difficult to cope in the short and medium term in producing goods and services, much needed for export earnings. Already in China, pollution is the biggest threat to growth bringing health and environmental issues. Disasters are likely to worsen pollution, not ease it.

According to the Asian Disaster Preparedness Center (ADPC), the outcome of Asia’s high rate of urbanization has been the expansion of urban populations into geographic areas, which are frequently affected by disaster events. The result is an increased vulnerability of populations and infrastructure. Disaster mitigation measures have rarely been attempted in most Asian countries. These include earthquake and cyclone-resistant buildings and infrastructure, flood and landslide control measures, incorporation of disaster vulnerability into land-use planning, and introduction of regulatory measures in industrialized zones. Thereby is another Asia business opportunity for savvy businesses! In China and India, investments in ‘disaster-proof’ infrastructure and logistics will increase China’s attractiveness as an investment location.

Besides disasters, diseases can severely reduce economic growth and development also. The World Health Organization (WHO) stated that pandemic influenza is the most feared security threat. Infectious diseases are now spreading faster and emerging more quickly than before. WHO reports that since the 1970s, newly emerging diseases have been identified at the unprecedented rate of one or more per year. Between 2003 to 2006 in South East Asia alone, there were 81 verified events of potential international public health concern.

In 2003, SARS spread from person to person, required no vector, displayed no particular geographical affinity, incubated silently for more than a week, mimicked the symptoms of many other diseases, and killed around 10% of those infected. SARS spread easily along the routes of Asian air travel, placing every city with an international airport at risk of imported cases.

As for the infamous Asia H5N1 bird flu virus, it is principally an avian disease, first seen in humans in Hong Kong, 1997. As of 21 April 2008 (FAO/WHO), there are already 309 reported cases with 208 deaths of human bird flu. Bird flu has swept through poultry and wild birds in Asia since 2003. It has killed huge numbers of birds and led to more than 60 human deaths. A flu pandemic could happen at any time and kill between 5-150 million people, warned Dr David Nabarro, the UN’s co-ordinator for avian and human influenza Dr Nabarro, who is charged with co-ordinating responses to bird flu, said a mutation of the virus affecting Asia could trigger new outbreaks. “It’s like a combination of global warming and HIV/Aids 10 times faster than it’s running at the moment,” Dr Nabarro told the BBC.

On 16 April 2008, BBC reported that Japan is to become the first country in the world to vaccinate thousands of officials against bird flu. Six thousand health workers and other staff will be inoculated over the next few months, and the programme might be extended to cover millions more. Although bird flu has caused 240 deaths since 1993, none has been in Japan. But there are fears that an outbreak elsewhere in Asia could spread quickly in Japan, which has some of the world’s most densely-populated areas.

Some Asian public health care capacity and delivery systems including China and India, with less than 5 percent of GDP spent on health care, are inadequate, experiencing shortages in qualified medical personnel, beds in hospitals, drugs, vaccines and health care supplies.

Continuous healthcare reforms and implementation by public administrators can also address the high cost of healthcare services. New prestigious local public health institutions in partnerships with leading public health schools can be created to produce more public health specialists. Nation-wide financial incentives like increasing bonuses to doctors to solely focus on public health care in good working environments can help to attract and retain public health talents away from private practice. Governments can finance research into developing more anti-virus vaccines and reach a consensus on desired total capacity in the region. Pharmaceutical companies can continue to develop new strains which pass regulatory requirements to strengthen immunisation efforts.

GAVI Alliance (formerly the Global Alliance for Vaccines and Immunisation) reports that WHO and UNICEF are organising workshops while Asia advisory bodies are being formed to address issues like the lack of national policies for use of seasonal influenza vaccine in the South East Asian countries, the need to strengthen influenza surveillance and ways to stimulate global demand for seasonal influenza vaccine to prepare better for a possible pandemic in the future.

Companies can also donate both money and equipment to develop data networks to help governments and NGOs to coordinate quick responses to diseases. Public Private Partnerships (PPP) will still play an important role in Asia disaster and disease containment strategies.

As Asian governments and health care companies use our market research surveys to check the Asia health landscape, one can’t help but ponder on a low-base scenario planning case, “If more Asia D & D concurrently strike on a massive scale, how well can Asia governments, businesses and citizens really cope?”…


26 Jan 2010, View from Asia, fDi magazine, Financial Times, London.

Both China and India are Asia’s trade giants and some economic statistics support this view. As a share of world GDP (based on PPP dollars, 2008), China’s share was 11.4% while India was 4.8. The compound annual growth rate of real GDP (PPP) from 1997 to 2008 was 9.5% for China, 7.1% for India and 3.8% for the world. The 2008 share of world total inward FDI flows was 6.4% for China and 2.4% for India.

The Confederation of India Industry reported that India-China trade had increased by more than 50% annually in the last five years. In 2008, China became India’s largest trading partner and the bilateral trade between the two countries reached US$ 51.8 billion, a growth of 34%. India has emerged as the 7th largest export market of China and 10th largest trade partner. It is projected that by 2050 India and China will be the two leading economies in the world.

It’s no wonder the neighbouring Asian countries remain concerned about their own national competitiveness with ASEAN keen to expedite the progress of ASEAN Economic Community.

While China-India trade remains positive and of much potential, existing constraints prevent the full potential from being realised.

Although China and India are connected by land, their current trade mostly passes the Strait of Malacca, (benefitting Singapore which is recently playing a higher value adding role besides providing a marine trading port as a go-between these two countries’ trade). However, the existing marine route is so far away that both time and cost constrain fuller economic and trade cooperation.

Poor land transportation. The time needed to traverse land routes has been significantly reduced with the rebuilding of the Stilwell Road that links China and India via Myanmar and the reopening of the Nathu La Pass for border trade. Still, problems remain for some reasons like very poor road conditions.

Distrust remains, caused by the1962 border war with some territory between them unsettled. This political and commercial distrust are fuelled by some Indians being wary of China’s cooperation with Pakistan, the “China threat” theory of an Indian fear of China’s rapid development plus an Indian aversion to some Chinese products.

Trade deficit/imbalance. What Indians export to China are resource-intensive or labour-intensive products, while what they import from China are manufactured goods with high added value. This trade structure, in turn, leads to a limited market share of Indian goods in China and a great risk of trade deficit. Trade disputes are still active, like India’s antidumping cases against China and India’s ban on Chinese toy imports.

In Oct 2009, China and India signed a Memorandum of Agreement (MoA) on cooperation in dealing with climate change in New Delhi, signaling an upgrading of Sino-Indian cooperation in the field. Jairam Ramesh, Minister of Environment and Forestry of India, said that this is the first time for both India and China to have started such bilateral cooperation this way, so it can be looked upon as an important step in the development of Indo-Chinese relations.

The China-India trade outlook remains promising but will take a long time to address constraints to fully realise the economic and trade potential.


29 March 2010, View from Asia, fDi magazine, Financial Times, London.

ASEAN’s top export sector is the electronics sector which manufactures products like semiconductor devices, integrated circuits, micro-assembly parts, electric motors, generators, capacitors, television and telephone parts, telecommunication equipment, communications and radar, as well as electrical apparatus.

The 2008 UN comtrade data showed that intra-ASEAN exports of electronics and electrical products was US$57.19 billion, up from US$30.96 billion in 2002! Of this 2008 export volume, the top shares were dominated by Singapore (56.2%), Malaysia (23.2%), Thailand (8.5%), Philippines (6.1%), Indonesia (4.8%) and Vietnam (1.3%).

While it was not surprising that Singapore has continued to dominate top spot with Malaysia playing second fiddle, the competition remains intense between Philippines, Thailand and Indonesia. Vietnam’s electronics ASEAN exports is experiencing a US$737.7 million upsurge. Constantly shifting national sector competitiveness with sectors moving up the value chain results in sectoral musical chair dominance, with Thailand replacing Singapore as a major production center of HDD. Global production chains continue to offshore and re-locate activities across countries, from processing of materials to production of components and to production of finished goods. This will be complicated by the provision and gradual integration of services across ASEAN.

ASEAN’s road map for integrating the electronics sector, now in its third phase, includes measures to eliminate both tariff and non-tariff barriers (NTBs). Other measures include improving the CEPT rules of origin, simplifying customs procedures, harmonising standards and conformance, expediting integrated transport logistics services, and promoting outsourcing arrangements.

This steady improvement in the ASEAN electronics sector poses a competitive threat to other Asian countries like Japan, South Korea, Taiwan and China with their big players like Sony, Samsung, and Acer.

Factor inputs like skilled labour is an important input driver of electronics sector. Compare the number of science and engineering students graduating annually. Thailand produces around 20,000 while China produces 450,000.

This intra-Asia electronics competition between North Asia-ASEAN countries has many implications for countries and companies, both outside Asia and within Asia.

One is the need to shorten strategic planning timelines from 5 year plans down to 1 to 2 year plans. The problem is time lag, as both national policies and corporate planning take time to implement. The ‘moving target’ phenomenon renders plans obsolete, making policy analysts and corporate planners scrambling to play catch up with their strategizing. More strategic planning and competitive intelligence capacity and resources thus need to be built, both from in-house and outsourcing to external third parties like think tanks and consultancies. This will improve the effectiveness of monitoring the fast-changing competitive environment, which is exacerbated by lack of sector and corporate level information in Asia. Like buying a car from the showroom, a published report or paper suffers from depreciated value the moment it is published.

A second implication is the need to improve sector productivity and innovation, which is a key to sustain sector development and industrial competitiveness.

A third implication is to produce more focused skilled labour input, especially in electronics engineering.

The stakes have gone up in Asia and the hare will not wait for the tortoise, regional cooperation or not. Be a roadrunner or be roadkill. Yes, the days of cutthroat regional, national and sector competitiveness are here to stay and will intensify all across Asia.


31 May 2010, View from Asia, fDi magazine, Financial Times, London.

Asia in 1H 2010 was a picture of rocky recovery. Amidst economic recovery, we witnessed the China earthquake, India’s Maoist insurgency and aircraft crashes, Pakistan mosque raids, Japanese rally and coalition rupture over US base on Okinawa, Thailand’s political violence, sinking of South Korean Cheonan warship, etc.

Being the world’s largest continent, it is easy to get spooked and prematurely conclude that Asia is risky for business. Issue is, does the presence of trouble indicate unacceptable market risks? Conversely, should there be a total absence of trouble to indicate market safety?

Truth is, every continent is different with its peculiar share of market risks and opportunities. Businesses should not make hasty decisions based on superficial indicators but constantly verify and update market conditions with ground checks.

Underneath these market rumbles lie evolving business opportunities. Foreign business leaders are advised to take time to concurrently know how to address each Asian country’s technical challenges as well as adaptive challenges by building interpersonal relations with Asian key stakeholders, influencing their beliefs, values and attitudes.

From a macro regional view, the AEC is slowly making progress toward its 2015 goals.

From a sectoral view, Asian exports of electronics, mineral fuels and machinery are still growing strong. What do Asians need then? Asia demand for these remain strong: IT, services, land and air infrastructure, natural resources like energy, logistics, urban-related retail and fashion products, education, and healthcare.

In a recent Asia investment lead generation campaign for our US venture capital client involving contacting 1,289 Asia SMEs, we made a surprising discovery. Almost one quarter of them are financially strong and have no need of external financing while the remainder express interest to partner with external companies.

It is easy to forget that compared to the West, democracy has a relatively shorter history in Asia, which is in the midst of multiple transformations. These include resurgence of Asia economic and consumerist power, capitalising on broken global supply chains with niche components and spares, changes in national political architecture, rising social forces, and civil awakening, thus re-distributing power between key state actors.

Before executing market entry or expansion plans, foreign investors should first thoroughly understand the complexity of diverse Asia with its simultaneous triple currents in its middle class consumerism, business intra-regional trade and evolution of political state governance, especially the developmental and bureaucratic state models. No one throws out the Asia baby just because of occasional stomach rumbles. The Asian baby will certainly make louder rumbles but it is a much larger baby who will grow larger than others!


26 July 2010, View from Asia, fDi magazine, Financial Times, London.

Cambodia, Laos, Myanmar and Vietnam. These countries have been considered by investors, market strategists and entrepreneurs for the last few years. Should they still be included in a market expansion portfolio? That depends. Out of many factors to consider, I particularly single out four.

1. Available key managers: investors should preferably first identify proven managers from their originating HQs and then send them to these CLMV countries. This is a superior choice than recruiting someone new though they may be locals. Alternatively, local managers should upon recruiting be required to spend some time in HQ for internalisation of business practices and monitoring before re-sending back to manage the CLMV offices. One of my roles is to be an Export Coach to companies. My first task is to assess companies’ export readiness. Investor companies should have committed and proven managers who are willing to spend some months or even years to manage the new foreign CLMV offices.

2. Political risk: investors’ risk appetite must be strong to weigh the risks of non guaranteed investment protection, both from national government and provincial government levels. The border lands tend to be much less decentralised due to the power of local elites and drug lords, who may not always respect the rule of law. Investors must be prepared to engage in direct negotiation with these private parties and to know them and their terms of trade. Licence and permit holders may only be a puppet of actual low key power mongers.

3. Sector growth: though the countries may not experience good economic growth, some sectors may still be growing. Investors should scrutinize both country and sector growth to avoid missing out opportunities.

4. Strategic intent: enter to service the local market or for exports? Local market size and spending power alone may be too small to justify a market entry. However, the relative affordable business costs may justify in-market investments for the purpose of exports.


1 Oct 2010, Seminar Speaker, International Enterprise of Singapore

Strategic planning for a China market entry or expansion strategy must be a comprehensive, multi faceted and structured process conducted cautiously and in detail for the investment amount is usually big. Don’t be impressed by big numbers, for most things about China are big, including losses and failures.

One, the motivation or strategic intent to enter China should consider China simultaneously as a lower cost sourcing, local market capture and re-export strategy. Scenarios must incorporate these motivations as they affect the economic feasibility. At least two of out these three motivations should be favorable.

Two, executives cannot use or analyse data from a particular customer segment or region to develop generalizations for another region of China. The larger and more attractive coastal data may not be applicable for smaller tier two or three cities, even with the ‘go West’, inland shift. The hinterland will still take a longer time period to develop strong growth.

Three, the strategic planning process is multi faceted, analyzing non market (customer) factors beyond favourable market size potential, branding, customer demographics or research feedback. I highlight three important non market factors.

The first factor is macro environment analysis. China’s economic growth depends significantly on its government support. China’s economy in 2008 grew 15.7% as it was accelerated by a massive 2009 stimulus package. The program then focused on government infrastructure spending, combined with increases in transfers, consumer subsidies and tax cuts. Hence, government policies should be closely monitored for emphasis areas.

The second factor is distribution. Increasingly, for large countries like China, India and Indonesia, a market entry strategy must also analyse distribution and logistics factors as these directly affects the strategy implementation. Such B2B support services face a derived demand, largely following consumer demand patterns. China’s level of automated material handling is currently low, estimated to be implemented in only 5% to 10% of China’s warehouses. The logistics industry is also very fragmented. Fortunately, China’s Regional Development Policy (11th Five Year Plan from 2006 – 2010) called for three mega clusters to form what I call the ‘3 Manufacturing Magnets’ with potentially 20 logistics hotspots. To support these 3 clusters’ development and inland move, the Chinese government has established more Bonded Logistics Parks (BLPs) and Bonded Warehouses. DCs or distribution centers is one key to improved efficiency and cost effectiveness in distribution. China news reported that Procter & Gamble (P&G) formally initiated the construction of a distribution center in Guangzhou in September. The center will consume more than US$100 million and will become the company’s largest in Asia and second largest in the world.

Another related distribution factor is the identification, evaluation and selection of an optimal distributor partner. China has a few hundred thousand companies. Take for example, Guangdong province (where Guangzhou is in). It has about 52,574 companies as of end 2008. A good solution is to get a local expert to perform a Partner Search with a 3-stage methodology: Broadlisting, Shortlisting (screening by some criteria list) and Arranging Company Meetings. In the shortlisting stage, your expert should assess the ability, suitability and interest of the prospects before recommending them. That way, you can prevent meetings from being cold-calls with little concrete trade interests. This stage is very tedious but necessary.

The third factor is focus. Work on one small area successfully first before expansion and try to avoid a multiple-entry points strategy across a few provinces simultaneously. With China being such a big and diverse country, it pays to be patient to grow your business gradually.


7 Dec 2010, View from Asia, fDi magazine, Financial Times, London.

ADB projects an average growth in emerging East Asia (ASEAN, China, Hong Kong, Taiwan, South Korea) to likely be 7.3% in 2011 after growing 8.8% in 2010. It notes that the weaker outlook for the global economy coupled with the phasing out of fiscal and monetary stimulus within the region means economic growth in the region should moderate in 2011.

As a regional macro variable, economic growth may only be a moderate 7.3%. However, the Asia story is mixed since it is so heterogeneous. We need to look at individual micro variables on a sector or market level.

The Asian bond market in 2011 is expected to post slower growth due to anti-overheating policies, austerity measures and a shake-out among risk assets, possibly depreciation Asian currencies and release of short US dollar positions.

In contrast, Asia capital market transaction volumes in 2011 are projected to be up by a further 15% on 2010 levels to reach US$88 billion.

Association of Asia Pacific Airlines (AAPA) forecasts a “very positive” 2011 for Asia Pacific full service airlines. In October 2010, AAPA members carried 15.9 million international passengers, an 11.8% year-on-year increase, with “robust” demand for business and leisure travel, supported by particularly strong demand on intra-regional routes. This marks the 12th consecutive month of traffic growth and the sixth consecutive month of double-digit growth.

China continues to post great growth. It is expected to become the world’s third-largest prescription drug market in 2011. Sales of prescription drugs in China will grow by US$40 billion through 2013. In the first 11 months of 2009, the medicine sector’s combined net profit was RMB 89.6 billion, up 25.9% year on year.

China’s petrochemical sector grew 43% in first 5 months of 2010 alone! China’s logistics outsourcing industry is expected to grow 33% each year through 2010 with 10 emerging inland logistics hotspots. China’s food processing industry was minimally affected by the downturn, continuing its 30 year old rapid expansion. In 2009, it achieved a new record high output of RMB4.5 trillion (US$662 billion), up nearly 20% from 2008. China’s food consumption in 2011 is forecast to grow 11.17% to US$219 bn. China’s automotive production was to increase from 5.6 million in 2006 to 8 million units in 2010. Other forecasts point to over 10 million per year by 2010. Concerns over capacity are likely to result in M&A activity and geographical consolidation.

In the fertilizer market in 2011, FAO forecast that Asia will consume 58.6% of fertilizer consumed globally though demand will increase by 10.4 million tonnes growing at 2.1% annually for all fertilizers.

In the ICT sector, 2011 is expected to experience built-up demand that is expected to fuel a surge in the industry spending.

In the real estate market, Asia in 2011 is expected to lead the upswing with corporate occupiers expanding by relocating and upgrading especially in Tier 1 office market, almost doubling 2009 level.

Conclusion for Asia opportunities in 2011? Look at the smaller but faster bouncing micro, ping pong balls, not just the bigger but slower dribbling macro basketballs.


4 Jan 2011, View from Asia, fDi magazine, Financial Times, London.

The OECD-FAO Agricultural Outlook (2010 to 2019) reported that global agricultural production is anticipated to grow more slowly in the next decade than in the past one. This growth is supported by a more sustainable and non-inflationary growth in big developing countries with weak growth in OECD countries the medium term. Global sectoral growth will be led by the regions of Latin America (fastest growing) and Eastern Europe (fastest growing in per capita terms) and, to a lesser extent, by certain countries in Asia.

In Asian agri markets and trade development, countries such as China with a well-established presence on international markets seek to diversify their sources of supply. Riding on the global economic recovery, it is a good time for agricultural producer-investors to consider market entry into new Asian markets, updating their identification and feasibility evaluation of investment opportunities in farming, milling, processing and other agri activities for both securing of supply as well as for local domestic market sales and re-export sales.

Livestock is one of the fastest growing sub-sectors in agriculture with over 80% of the projected growth in the next decade taking place in developing countries, particularly in Asia and the Pacific (especially China).

For biofuels, prospects are uncertain because of unpredictable factors like the future trend in crude oil prices, changes in policies and regulations and developments in new generation technologies.

For Asian developing and emerging countries, agri products that show rapid growth are rice (89%), oilseeds (57%), protein meals (81%), vegetable oils (92%), sugar (89%), beef and veal (56%) and poultry (66%). Thus, for countries like Cambodia, Vietnam, Indonesia and Thailand, overseas investors continue to expand their activities in rice, palm oil, jatropha, sugar cane, and biodiesel production. To increase likelihood of success, investors should consider use of bigger project financing (US$10 million and above per project) and adoption of modern technology with adequate irrigation systems to increase annual crop yields and double cropping. Many Asian mills have out-dated technology with no sorting, drying or grading machines. This results in poor harvested crops that may not meet international certification standards.

In terms of local Asian partner search and evaluation, investors should also study the viability of engaging in and holding minority shares in joint ventures with screened and qualified local partners like established land lords and farmers who may be required by law to hold a majority 51% equity stake in the JV.

Another production possibility is contract farming of a workable farm size. Too many contract farmers increase the difficulty of enforcing contract compliance, even with the assurance or written agreements of provincial, commune or village leaders as rule of law is hard to comply with in some parts of Asia. It is tough to manage 30,000 contract farmers to ensure that they meet the contracted quality and quantity of crops within stipulated harvest time and that they do not sell to highest bidders. Also, having too few contract farmers may result in no or smaller scale economies. Most small Asian farmers own small land parcels between 0.5 hectare to 1 hectare in size. It is a challenge to convince them to sell their land to a single owner in order to form a workable farm size of at least 500 hectares. Thus, increased production allows these countries to emerge as important players in the export market.

Investors should also provide contingencies for adverse weather like floods, typhoons, droughts and pests. Rivers that span multiple countries like the Mekong River can produce flash floods one year and drought the next.

For export implementation, locating your agri farms and mills near a big port is best to minimise local transport costs. These can be high due to poor infrastructure and informal economy.

The Asia agri business is always there to make money for investors. It is a matter of diligently doing your research, knowing and managing the risks, and building strong relationships with the locals, be they officials, landlords, farmers, suppliers or employees. These factors can make the difference in your agri investment project between a killing field and a money field.


26 Mar 2011, View from Asia, fDi magazine, Financial Times, London.

Trouble comes in waves and cycles, not just business and economic cycles. Just a few years ago, Asia saw a wave of terrorist cell groups hitting India, Indonesia, Malaysia, Pakistan, Sri Lanka, Singapore, and Philippines. Then, bird flu and H1N1 affected hundreds of thousands in Asia. The 2008 global economic recession had also badly slowed down Asia till 2010.

From January to March 2011 alone, 4 significant earthquakes in Asia hit: Southwest Pakistan (7.2), New Zealand (6.3), East coast of Honshu, Japan (9.0) and Myanmar (6.8). While earthquakes and tremors routinely occur, these latest occurrences within a short time period have disrupted Asia’s connected supply chains, public transportation, food supplies, power shortages and businesses. For a brief time period, all international flights out of the affected countries were suspended. Expatriate staff are also leaving for safer countries less prone to earthquakes, fearing for personal safety.

Economists are predicting that devastating earthquakes cause rising oil prices and higher interest rates, which in turn will slow down Asia’s economic growth.

Japan disruptions are causing inflation and shortages of raw materials and parts for automotive, electronics, and shipbuilding. That in turn is predicted to slow industrial production in other Asian countries, who are expected to experience a short-term reduction in demand from Japan as their major export partner. Thus, all factors of production like land, labour and capital are affected.

Beyond macroeconomics at the company level, most business owners and executives are already asking, “How do I best manage my business and investments to cope with the immediate effects of earthquakes?”. Mixed farming, irrigated agriculture and food businesses are one of the first few to get hit. Food and livestock from farms now have to procure from and outsource to foreign suppliers. Major Asia crops affected are rice, wheat, corn and tea are most affected. Middle income consumers now have to pay more for such daily staples, reducing their savings propensity, disposable income and spending on non-essential goods and services like luxury and tourism.

Logistics, supply chain management and transportation sectors are also significantly affected due to partial shutdown or fall in capacity utilisation.

No one can foretell when certain parts of Asia will fully recover from the 9.0 Japan earthquake to reach normalcy again. Stoic and resilient Asians will probably take such devastation and disruptions in our stride, hunker down to deal with the short term crisis on a ‘best-effort’ basis and try to identify and capitalise on new business opportunities as we wait for the Asian phoenix to rise again. Its business as usual as opportunities come in waves too. Perhaps these may be unlocked through operational free trade agreements, freer intra regional movement of goods, parts and people, and rising entrepreneurism and innovation. One short term crisis will not cripple Asia for long but will strengthen and improve it after some time as Asian Terminator says, “I’ll be back!”.


5 May 2011, International Enterprise of Singapore website

Diversified Asia can be a strategic planner’s nightmare as it contains 60% of the world’s populations, has more than 600,000 communities and has numerous sub-cultures. With improving Asian economies and growing investor interest in Asia regional expansion, more companies are now evaluating India’s market attractiveness and feasibility of entering and investing in India. Like China, India’s fast-growing economy and big potential market size glimmer and shine tantalisingly to investors. Again like China, foreign companies also can lose big in a big target country.

Below are some guiding points to consider when developing an India market entry and expansion strategy.

1. Macro Environmental Analysis.

a. Regulatory Environment: Indian policies and regulations tend to change rapidly amid a slow moving bureaucracy. As such, foreign businesses need to constantly monitor and update these and perhaps spend time with their state policy maker as part of their KYR or ‘Know Your Regulator’ efforts.

b. Market Analysis: Go local. Like Asia, India is a hugely diversified country with over 600,000 rural villages. Investment climates and political environments across Indian states are mixed. A “bottom-up” state by state consolidated approach is best, not simply copying-and-pasting from HQ onto the India context.

c. Strategic Intent: When assessing the India market size to estimate market demand potential, a key strategic intent is whether the investing company wishes to adopt a single or multiple market strategy i.e. to serve only the local India market only or the intent is to concurrently serve both the local market as well as the global re-export market. The intent shapes the strategy. A multiple market entry strategy can accept a moderate India market size and market growth as the investor can compensate that with the bigger re-export market. If this is the intent, than treating India as a manufacturing hub to serve other markets makes financial sense.

2. Demand-side Analysis (customer behaviour and characteristics).

Conduct a thorough KYC or ‘Know Your Customer’ study. Knowing key demographic factors is critical, especially since India has a very big scattered base of low and medium end segments living outside its 6 big metropolitan cities (Delhi, Mumbai, Bangalore, Hyderabad, Kolkata, and Chennai.

3. Supply-side Analysis (Production & Competition).

With local India components and supplies costing lower than using imports, India supply chains and production need to be tweaked to increase the use of more India supplies. For Pricing, go low but not the lowest. Setting the lowest price points need not capture a leading market share away from Indian competitors since Indian customers are also willing to pay a premium for added value and good quality. Hiring local Indian CEOs and managers who are familiar with local business cultures and target markets is almost a must-have.

4. Site Selection and Distribution Analysis.

For factories, stores or offices, site characterization is affected as location selection criteria need to take into account India’s under-developed road infrastructure and distribution network. Businesses should change their location preferences to more sub-urban locations and smaller tier 2 cities and also to depend heavily on third-party logistics. Contrary to imagining having a single grand all-India distribution network system or distributor, entrants should also search for and evaluate several state-level distributor partners who know their state well and who are already successful in distribution in their respective state. Choosing several of these state distributors and having an in-house channel manager to manage them increases the success rate of distributing your goods across India.

5. India Market Strategy.

Foreign businesses can sustain a competitive advantage by choosing a cost leadership, differentiation or focus strategy individually for each state. It is hard to generalise which one is superior as much depends on the target state’s characteristics. However, investors should anticipate changes in the state business environment and then adjust their strategy to accommodate them.

Finally, I coin the term “Inception India”. The movie “Inception” tells of a story within a story, down to 4 levels. Likewise, India has markets within markets, cultures within cultures. Foreign businesses should therefore stay flexible enough to adopt non-rigid processes, understand their target states and markets well and be able to make minute changes to accommodate diversifying and changing conditions. Otherwise, one may end up like Inception’s ending, spinning and making losses endlessly and in bewilderment.


27 May 2011, View from Asia, fDi magazine, Financial Times, London.

In the last issue, I wrote about the impact of the great Japan earthquake on business in Asia from businesses’ perspective. In the May 2008 issue on Asia Disasters, Disease and Development, I wrote that disaster mitigation measures have rarely been attempted in most Asian countries. These include earthquake and cyclone-resistant buildings and infrastructure, flood and landslide control measures, incorporation of disaster vulnerability into land-use planning, and introduction of regulatory measures in industrialized zones.

From the governments’ perspective on crisis management, policies are drawn to address mostly flooding and housing with increasing governments-NGO cooperation, role of NGOs and community volunteers. However, not much sector plans are drawn up to address logistics, supply chain management and transportation issues for businesses.

To UN’s credit, it established its United Nations Development Programme (UNDP). UNDP in turn has a Crisis Prevention and Recovery Unit, which is part of the Policy and Programmes directorate. In principle, UNDP’s Operations Manager and Logistics Specialists provide long-term assistance to support countries’ capacity building. The effectiveness is another issue altogether, as it depends on countries’ resource commitment and implementation also.

Asia regional bodies for disaster management include Asian Disaster Preparedness Center (ADPC) in Thailand. Its Disaster Management Systems (DMS) team focuses on strengthening institutional capacities for disaster risk management of countries of the region, mostly for flooding and safer housing. ADPC reported that methods of implementation of disaster reduction efforts vary in Asia due to different forms of local governance and the level of accountability to the civil society.

In Southeast Asia, cooperation in disaster management is institutionalised through the ASEAN Experts Group on Disaster Management (AEGDM), which meets every two years to discuss issues and share experiences on disaster prevention, mitigation, preparedness, response and recovery, and recommend actions that Member Countries may undertake.

South Asian Association for Regional Cooperation (SAARC) is another regional body. For many years, there was no significant development on the issue of disaster management at regional level except for environmental preservation. However, there is progress. On 3 July 2009, it set up a Natural Disaster Rapid Response Mechanism (NDRRM). On 25 May 2011, SAARC delegates met at an Inter-Governmental Meeting to finalize the text of the draft SAARC Agreement on Rapid Response to Natural Disasters.

Cambodia has its National Committee for Disaster Management (NCDM). In Cambodia, community volunteers are trained by Red Cross on disaster preparedness, hygiene and sanitation, management of safe areas, early warning system, village flood level recording, assessing physical vulnerability of housing to flooding and possible remedial measures, and community organising.

In Pakistan, disaster management revolves around flood disasters with a primary focus on rescue and relief. Karachi Port Trust (KPT) is responsible for ensuring that the marine environment within the Karachi Port’s limit remains free from pollution. Discharge of pollutants is prohibited within the limits of the Karachi Port. The Emergency Relief Cell is mandated to deal only with post-disaster scenarios.

Indonesia has its National Coordinating Body for Disaster and IDP Management (BAKORNAS PBP). Indonesia is vulnerable to seismic activity, volcano fires and some flooding. Disaster management is still government driven and more community-based initiatives are needed.

Philippines has its National Disaster Coordinating Council (NDCC). NDCC plans to incorporate local resources like structural engineers and professionals to local disaster coordinating councils. In Philippines, 5% of the local government revenue is appropriated for relief, rehabilitation and reconstruction, and NDCC has proposed a bill that will authorize local government units to use this local calamity fund for pre-disaster activities.

Vietnam has its Central committee for Storm and Flood Control (CCSFC) as well as growing Government – NGO cooperation. The establishment of the Natural Disaster Mitigation Partnership for Central Vietnam in June 2001 provided a framework for the government, donors and NGOs to cooperate and coordinate disaster relief, rehabilitation and recovery efforts for the central provinces of Vietnam.

My conclusion at the May 2008 issue remains valid: Public Private Partnerships (PPP) will still play an important role in Asia disaster and disease containment strategies. Relief assistance and donor support are still needed. Community volunteers are needed. The rising Government – NGO cooperation and growing role of NGOs in disaster management has evolved from relief and emergency response to disaster mitigation and preparedness. Private companies can also donate both money and equipment to develop data networks to help governments and NGOs to coordinate quick responses to crises. Finally, sectoral plans should incorporate disaster management and to involve private companies in logistics, supply chain management and transportation.


25 Jul 2011, View from Asia, fDi magazine, Financial Times, London.

It is easy to sound hyperbolic, whip up some hype, harp on the oft-said ‘market potential’ of Asia or upcoming food shortages and draw impressive graphs showing uptrending extrapolations of future revenue and income streams, even on Asia agri investment. Economists and NGOs write about the merits of PPPs and sustainable development concepts but often are not experienced in running a big-scale commercial business nor are knowledgeable in the implementation and practical side of big enterprises. As a prudent Asia strategy consultant who is entrusted with multi-million-dollar ‘go or no-go’ investment decisions and recommendations as well as being a former Asia sales and marketing director in industry, I choose to be a ‘no-drama’ and conservative Asia market strategist cum investment advisor.

In Jan 2011 when I wrote on the same topi on Asia agri investment, much has happened since then. Floods have decimated much Australian and New Zealand sugar cane plantations, resulting in offshoring and search for alternative plantations elsewhere in Asia.

Freakish unpredictable adverse weather like floods and droughts continue to play havoc on financial and investment feasibility studies, which demand a certain amount of predictable performance. This has led to uncertainty and doubts by investors, which in turn contributes to investment lag.

Government economic concession lands in Asia are also quickly being taken. There are estimates that in some Asian countries, there is only 5% of such concession lands left whose supply will be gone by end of 2011. It is difficult to also identify landowners of big normal land holdings from 1,000 hectares and above as they do not always appear on official land registry records. More than 80% of land plots held in Asian countries are small, between 0.5 hectare to 1 hectare, and thus require much legwork to persuade land owners to sell to collectively form a big farming land size to reap economies of scale using modern farming machinery and methods.

Government deficits amid weak investment climate continue to hamper upgrading and improvement of poor infrastructure like roads and ports.

Sudden changes in government zoning or land use regulations caused by either land reform or capricious officials can delay intended investments, whether greenfield or brownfield.

Newly introduced government agri import stockpiling schemes and non-tariff barriers (NTBs) have also added to the complexity of agri investments in Asia.

The infamous informal payments add about 20% to total costs and result in uncompetitive export selling prices, be they CIF or FOB, on top of import tariffs and other duties. In some countries, a typical daily heavy truck delivery from the farming production plant to the nearest port can encounter as much as 20 illegal stops by policemen demanding ‘cargo clearance’ fees. Such fees are also demanded at the port or customs area by cargo clearance officials who can delay cargo release anywhere from 3 days to 2 weeks. Anti-corruption legislation, difficulties in proving corruption and repeated appeals to uphold good business ethics and morals will not be able to totally eradicate informal payments when the average rural monthly income in Asia can be as low as US$30.

Appeals from well-meaning NGOs touting the merits of community-based schemes like contract farming benefit the local farmers but cause huge difficulties in implementation for investors with limited HQ manpower to deploy on the ground, limited financial resources and not knowing or having good local contacts.

I have said it in January and it’s worth repeating: Identifying and mitigating risk factors can make the difference in your agri investment project between a killing field and a money field. Asia agri investment is difficult and fraught with many risks. Investors who have deep pockets, a longer patient time frame, good local staff, trustworthy local Asia connections and good Asia market intelligence stand a better chance to reap reasonable ROIs. Be warned.


21 Sep 2011, View from Asia, fDi magazine, Financial Times, London.

The US and EU still have the largest share of global ICT/R&D capacity but the share is declining. Others like South Korea, Taiwan, Singapore, Hong Kong, and of late, India and China are fast catching up. In Asia, the information and communication technologies (ICT) sector has undergone much change in recent years. I highlight three areas: government policies, consumers’ growing tech-savvy, and increasing competitive intensity.

One, Asian government policies, Walden University reported the high research intensity in Asia with 15% of turnover with 20% in some areas. Chinese R&D expenditure is about 1.5 % of GDP with 1.4 mn researchers. China’s ICT expenditure is 6% of GDP, next to India’s 4. Together, China and India account for roughly half of global R&D growth. R&D collaboration in the ASEAN region was robust – between China and Japan; and between S. Korea, Singapore, and Taiwan.

Nationally, clusters of innovation are found in Singapore (Infocomm), Pune, India (software), Sondo, China (FRID, New Media), Beijing, China (IT, Telecom), Shanghai, China (IC Design), Iskandar, Malaysia (Technology parks), Singapore.

ICT infrastructure is also being developed and upgraded throughout Asia. Policies being implemented include those on interconnection, access, mobile phone base stations, licensing, competition management and next generation nationwide broadband network.

Bilateral/Regional collaborations: Recipients of EU ICT funding are China, India, Singapore, Japan, Malaysia and Thailand.

Two, Asian consumers. Demand has been driven by music, entertainment, social networking and telecommunications, boosted by macro factors like rising disposable incomes, urbanisation away from rural areas, and growing mobile Internet connectivity.

Asia is the world’s largest mobile phone market. Euromonitor reported that Asia’s consumer spending on communications is projected to grow from US$405 billion in 2009 to US$815 billion by 2015. Asia had 2.1 billion mobile phone subscriptions in 2009, or 46.0% of the world’s total subscriptions. However, in terms of population penetration, coverage in Asia Pacific remains low, and significant potential for expansion as Asia had the world’s second lowest penetration level at 55.1% in 2009.

Mobile broadband penetration in Asia by 2012 is projected at 60% while fixed broadband penetration is at 24%.

Richer Asian households tend to spend more on communications. In Japan and Malaysia, telecommunication services accounted for more than 90.0% of consumers’ expenditure on communications in 2009. In India, Indonesia, Philippines and South Korea, consumers spent the bulk share of communications expenditure on telecom equipment such as handsets, and relatively little on telecom services such as talk time, subscription fees and other mobile services. While in Vietnam, Thailand and China, telecom services represented about half of consumers’ expenditure on communications, while telecom equipment accounted for a smaller share of between 25.0% to 44.0% in 2009.

Nine Asian nations are among the top 20 countries with the highest number of Internet users (China 162 mn, Japan 86.3 mn, India 42 mn, South Korea 34.1 mn, Indonesia 20mn, Vietnam 16.5 mn, Taiwan 14.5 mn, Phillippines 14 mn).

EU’s Information Society and Media Directorate General (INFSO) reported that future ICT demand will be driven by health (customised health systems, implants, imaging); ageing (health monitoring, social interaction); content (user generated, social networking, games); manufacturing and production systems (smart manufacturing, virtual manufacturing) and green movement (environmentally friendly transport systems, electric vehicles, green products).

Three, competitive intensity of ICT industry in Asia. Manufacturers continue to focus on ICT equipment, devices and electronic components. Asian giants’ ICT/R&D policy is “technology and industry first, science later” approach. High tech (HT) exports in Asia is around 27% of global exports.

China remains a very big ICT player. China’s share of global HT/ICT goods exports rose from 6% in 1995 to 20% in 2008. Asia‐9 countries import 70% of their ICT goods from China. China is today the world’s major assembler of ICT goods today. Lenovo is the fourth largest vendor of personal computers in the world and the largest seller of PCs in China, with a 28.6% market share. Huawei Technologies and other Chinese companies are moving towards software development to compete with the Asian software giant, India.

The call or contact centre market in Asia earned revenues of US$665.4 million in 2007 and Frost & Sullivan estimates this figure will grow by a 10.2% compound annual growth rate (CAGR) to hit US$13.1 billion by the end of 2014. Except for the Philippines where some deals were deferred, almost all other Asia-Pacific countries saw contact centres increasing their investments on equipment and applications to improve customer interaction services. The rise in investment is attributed to businesses placing greater emphasis on the role of contact centres. Other factors contributing to growth include strong economic growth in Asia driving new call centre set-ups and expansion in some countries, the migration to IP (Internet Protocol) driving upgrades and replacements, and the offshoring of business from high-cost markets such as the US and Europe.

The Asia system integration (SI) market continues to grow, good for both system integrators and software resellers. By 2012, IDC expects the Asia/Pacific (excluding Japan) consulting and SI market to increase from US$13.47 billion to US$22.58 billion with a CAGR of 9.1% between 2007 and 2012. The markets of China, India, and South Korea will primarily drive this growth. Growth factors include the growing complexity of IT infrastructure, need to integrate multiple application/system capabilities increased corporate efforts directed at application consolidation, optimization and rationalisation. Hence, there is still strong B2B customer demand for enterprise application-based and infrastructure services, business intelligence (BI), enterprise resource planning (ERP), applications management and modernisation (AMM) solutions. The Asia SI market will however be impacted by the adoption of emerging delivery models, such as cloud computing, SaaS and application platform as a service (APaaS).

Challenges include protection of IPR, technology transfer, and mutual access to national programmes by international players. Future trends to monitor include the convergence of ICT, biochips (organic electronics) and cognition (robotics, adaptive and learning systems); evolving Internet (services, network, access devices); and continuing proliferation of ICT demand from consumers.

In short, ICT remains hot in Asia for all players – governments, consumers and ICT players (manufacturers, system integrators, resellers).


18 Nov 2012, View from Asia, fDi magazine, Financial Times, London.

Asia’s Green Revolution started in 1961 when India faced mass famine. India began its own Green Revolution programme of plant breeding, irrigation development, and financing of agrochemicals. India soon adopted IR8, a semi-dwarf, high yielding rice variety that could produce 10 times the yield of traditional rice per plant when grown with certain fertilizers and irrigation. IR8 was a success throughout Asia.

The Green Revolution initially started in the agriculture sector which included modern irrigation projects, pesticides, synthetic nitrogen fertilizer and improved crop varieties.

Now, Asia green technology is led by government policies and spreading to other sectors, continuously involving evolving groups of policies, methods, materials, and techniques.

Green growth is a policy focus for the Asia-Pacific region. It emphasizes environmentally sustainable economic progress which fosters low-carbon, socially inclusive development. Governments like South Korea and ASEAN are now fine tuning their green growth policies.

In 2008, South Korea’s Dr Han Seung-soo, the then Prime Minister, announced that the Korean national economy would focus on low-carbon, green growth. The new green deal, which encompassed energy conservation, recycling, carbon reduction, flood prevention, development around the country’s four main rivers and maintaining forest resources while aiming to create almost one million jobs, brought the South Korean economy got out of crisis faster than others in Asia.

Global Green Growth Institute (GGGI) based in Korea has partnered the Danish Ministry of Foreign Affairs to hold the first annual Global Green Growth Forum (3GF) between October 10 and 11 this year in Copenhagen, Denmark with the aim to advance public-private cooperation in the field of green growth.

At city level, Singapore is Asia’s greenest metropolis. This is the conclusion of the Asian Green City Index – a study commissioned by Siemens and performed by the independent Economist Intelligence Unit (EIU).

Cambodia is developing its Green Growth Master Plan (GGMP) and establishing a National Committee on Green Growth (NCGG) to constitute Cambodia’s national framework for sustainable development.

Indonesia is the third largest emitter globally and has per capita emissions almost three times higher than China. The Government of East Kalimantan and the Indonesian National Council of Climate Change (DNPI) is focusing green growth planning on Central and East Kalimantan provinces, being the first and third largest emitters among the provinces, respectively.

Emerging green applications and key areas now include green energy (development of alternative fuels like sustainable biofuels, energy efficiency, and renewable energy), green international trade, green public procurement, green buildings, green chemicals (reduction or elimination of the use and generation of hazardous substances), and green nanotechnology (manipulation of materials at the scale of the nanometer, one billionth of a meter).

However, at the corporate level, Asia’s adoption of green technology is now only at the nascent stage, incurring high early development costs but also potentially yielding future high profits for such early movers.

Some Asian companies are already using green tech to produce LED lighting products, either greenfield technology or converting products meant for Western markets to Asian voltage.

I am personally arranging private equity investment leads for green production of castor oil production and from Japanese investors to bring in their green tech investment to mature and emerging Asian markets. These range from energy-saving street LED light bulbs which replaces mercury, solar panels, power generators, wind power using motor repulsion power and nanomised emulsion oil systems offering 20% savings. The Asian green tech deals are slowly heating up indeed.


1 Feb 2012, View from Asia, fDi magazine, Financial Times, London.

Hot question now is, “Myanmar is now open. Seems good but alright to enter”? That depends on your support from top management, appetite for risk taking, quality of contacts and relationships, and time frame.

My answer is that opportunities come with risks and challenges, as always. Below is a short check list for Myanmar but can be customised for emerging Asian economies like Cambodia, Vietnam, East Timor, etc

First, let’s look at the incentives.


• Exemption from income taxes for up to three years

• Accelerated depreciation of assets • Income tax relief on reinvested profits

• A reduction of up to 50% on income taxes due on products exported from Myanmar.

• Exemption from customs duty on machinery and other capital goods imported as part of operations

• Government guarantees against nationalization.

• Repatriation of profits and invested capitals.

• Carry forward losses for up to three years

• Exemption from customs duty on raw materials imported for the first three years of operations



• Many countries have imposed trade sanctions against Myanmar. However, with the liberalizing reforms, I expect that some of these will gradually be removed or loosened.

• Legal and regulatory frameworks are based on English common law and are being improved. Compliance and enforcement will still take time.


• Much depends on your local business partner. Are they well connected and trustworthy? How good a relationship have you built with them? If not, start visiting them often. It’s advisable to also work with trusted local freight forwarders and distributors with good working knowledge of customs and import procedures.

• Information asymmetry: there is a big lack of reliable updated market data. You have to pay even for obsolete unreliable data and introductions to potential local partners. Again, research, research and research. An evaluated ‘guesstimate’ after some conducted due diligence is far superior than no data or pure hunch.


• Land: Watch for government officials who promise you land titles, collect your money but deliver nothing and disappear. Also watch for farmers who sign contracts promising to produce specified crop type, quantity and quality but later renege and produce other crops to other agents or producers offering higher selling prices.

• As with other developing countries, be prepared to pay informal payments.

• Myanmar is no short term investment market. Your top management must be prepared to commit both financial and non-financial resources, make losses in first few years and navigate before expecting to yield returns.


It is recommended to perform a feasibility study with comprehensive coverage of macro factors, sector-specific drivers and company-level analysis.


Myanmar’s Ministry of Agriculture and Irrigation reports the following opportunities.

• Establishing agro-based industries o Plantation crops: rubber, oil palm, and cashew nut, horticultural crops- mango, banana, pineapple o Sugar mills, jute, rubber o Cotton (textile industry is growing)

o Others: pesticide plants, seed processing plants, edible oil mills, food processing factories, animal feed plants, bio-diesel fuel

• Assembling and manufacturing of light agricultural machinery and small farm implements (eg. tillers, tractors, water pumps, sprinklers and drip irrigation sets)

• Manufacturing of agricultural inputs and related support products

• Trading of agricultural commodities, input supplies and machineries

o Export Items: Rice (major export item), Maize, Black gram, Green gram, Pigeon pea, Chick pea, Sesame, Onion, Tamarind, Raw Rubber, Vegetable & Fruits,

o Import Items: Power Tiller, Hand tractor, Fertilizers, Pesticides, Herbicides, Diesel oil, Dumper, Loader and Spare parts, Water pumps, Hydraulic excavators, Gear box assembly for hand tractor, MS rod & mild steel, Hybrid and quality seeds


• Plantations for hardwoods like teakwood, Yamane, padauk, bamboo and cane.


• Mining for copper, pearls, rubies, jade, sapphires, gold, tin, lead, and zinc.

• Construction materials


• Recreation centres, resorts, golf club, hotels, motels, landscaping design around dams, travel agencies. Tourism sector is expected to grow from a low base in 2011 onwards.


• Irrigation projects and implementation of projects

• Roads are old and mostly unpaved except in major cities. Beware of the big illegal trade in wholesale centres and along peripheral towns.

• Energy shortages are common


FMCG products which caters to lower income target segments offers strong potential, like low cost white goods, pharmaceuticals, cosmetics etc. As Thailand is a neighbouring country, expect Thai products to enjoy more brand awareness as an early mover advantage head start compared to products from other countries. However, there is growing demand for mid to luxury products catering to the very small percentage of the higher-income consumers, the foreign expatriates, local business families and senior government officials.

Final take? Compare and select a suitable legal corporate entity (offshore or onshore), consider exporting from your Thai office, appoint local partners and external third party business advisors who can either study the market in detail or act as introducers.


25 Mar 2012, View from Asia, fDi magazine, Financial Times, London.

It’s not always about competing based on lowest costs in Asia, as even low-cost countries like India and China already conduct outsourcing. Asia outsourcing companies have moved up the value chain, from providing simple contact centre services to end-to-end BPO (business process outsourcing) services.

In a survey conducted by KPMG and EIU, the most popular function outsourced in Asia is IT solutions. The second most popular outsourcing is accounting, debt collecting and tax processing. The third most popular one is knowledge process outsourcing (KPO) like data collection, report analysis and writing, human resource and supply chain management as part of BPO. Even in KPO services like market research and management consulting, there is increasing outsourcing, as Japanese companies need to depend on SE Asian sub-contractors for their language communication, knowledge of doing business in SE Asia, knowledge and background checks of potential SE Asian partners for local partner evaluation and their SE Asian contacts for field investigation to update fresh market updates for opportunities and risks. However, there is lesser outsourcing for Asia contract manufacturing since Asian countries are already relatively low cost for labour and capital, compared to North America and Europe. Still, there is also a slight musical-chair shifting of manufacturing out of China and Vietnam into Indonesia, Cambodia and Myanmar.

Among all Asian companies surveyed, Indian companies remain the most open to consider outsourcing all types of business functions.

Another survey conducted by PWC and Duke University revealed that relying on low cost and labour arbitrage was no longer a successful strategy for outsourcing providers, who must identify ways to become valued business partners instead of just a third-party service-delivery company. As this industry transition into a more mature stage, clients are looking at quality and service levels besides cost as increasingly important buying factors. Companies are now outsourcing more non-key operations as well as R&D, engineering and marketing to outsourcing companies. Hence, smaller and new outsourcing players will find it difficult to compete and may be forced to adopt a niche boutique strategy of offering either lower-cost services or specialised skills, as well as to diversify their client base away from North America to emerging countries, India, Japan, Latin America and Europe.

Together with increasing Asian outsourcing is offshoring, with the main motivation being to deliver operating saving.

A notable country is Japan, where in the aftermath of 2011’s triple-whammy (earthquake, tsunami, and nuclear disasters) with costly production delays and supply chain breakdowns, many Japanese companies are currently shifting even their Asia regional HQ to SE Asian countries like Singapore, with industrial facilities and commercial properties being acquired and distribution functions being outsourced to local SE Asian partner companies or deals involving technology transfer.

However, a bigger value in Asian offshoring is the improvement of capability building where companies can benefit from offshoring to lower-cost, award-winning, world-class performing qualified companies in Asia. Hence, rapidly evolving capabilities in Asia will more than compensate for their rising wage rates. Again, the diversified Asia jewel poses an on-going challenge with its constantly changing landscape.


15 May 2012, View from Asia, fDi magazine, Financial Times, London.

Logistics services are classified into Tier-1 core freight, Tier-2 related freight (multimodal) and Tier-3 non-core freight. Core freight logistics services include cargo handling, storage and warehousing, transport agency, as well as support and auxiliary transport services. Related freight logistics services include sub-sectors (like maritime, inland waterways, air, rail and road transport services) related to freight transport services as well as technical testing and analysis, postal and courier, customs brokerage, wholesale and retail trade services.

Globalisation and the search for cheaper sources of raw materials and components have spurred the growth of FTAs. AFTA 2015 will have much impact on movement of finished goods, components, services and labour within ASEAN. Also, other FTAs like TPP and the China-Japan-Korea in principle are all expected to boost multi-lateral trade, on the back of increasing 3PL mergers to handle all of clients logistics needs. Is Asian logistics able to handle all these impending changes?

Asia’s logistics strength traditionally is supply chain optimisation. Players continue to improve their competencies in global supply chain network design and optimisation. The Logistics Institute reports that logistics hubs are being consolidated while RDCs (regional distribution centres) are being made more flexible. Other areas of improvement include port system productivity, as well as integration of manufacturing and services.

In terms of logistics friendliness, a survey rated Singapore as very good, Brunei and Thailand as good, Philippines, Cambodia, Vietnam, Malaysia, Myanmar, and Laos as average while Indonesia was weak. Asia being diversified also shows different logistics competencies.

Level 1 regions include Singapore, Hong Kong and South Korea, with excellent infrastructure and latest transportation, logistics and information systems. In such countries, B2B and B2C commerce and logistics fulfilment are excellent.

Level 2 regions include China, India and Malaysia where logistics and transportation is moderate. Level 3 regions include countries like Cambodia, Indonesia, Myanmar and Vietnam where facilities and infrastructure are poor and where B2C fulfilment is inefficient and costly.

An emerging area is improving supply chain technology like real-time control applications like RFID, natural language processing and data capture technologies.

Barriers to Asia logistics continue to dog this sector.

The biggest barrier is inefficient customs procedures and inspections. Requirements for documentation is time consuming while requirements for customs inspection is burdensome. Also, classification of goods is different across countries.

The second barrier is barriers in land transportation. Limitations are placed on equipment usage, fleet size and operating hours. There is lack of border crossing coordination and inbound clearance processes are inefficient.

Breakthrough in Asia logistics then hinges on reducing these two biggest barriers.

Customs efficiency depends on the pace of adopting a common EDI and all gateways to enhance flow efficiency, adopt common inspection policy to reduce need for repeat inspections, as well as installation of clear and transparent customs rules, and educating customs officers on proper classification.

In land transportation, regulations should allow common certified trucks for cross-border transportation an d in-country operations. Also, there should be a single window for documentation and transparent customs regulations.

Other factors that could improve Asia logistics is the rise of asset-less 4PLs and development of new services like reverse logistics, service chain management and design for logistics.

Hence, in analysing Asia market opportunities, the analysis of distribution and logistics and selection of an optimum distribution partner is critical in any strategic planning and investment for market entry or expansion.


10 Jul 2012, View from Asia, fDi magazine, Financial Times, London.

How are Asian port and shipping industries affected by macro intra-Asia trade and investment flows? Let’s briefly look at the latest intra-Asia FDI flows first.

UNESCAP in its Economic and Social Survey 2012 reported that Asia Pac inflows are increasing due to healthy growth prospects in these economies. Also, the region is gaining importance as sources of FDI which is partly due to rising TNCs (trans national corporations and their desire to compete in new markets). Asian FDI tends to be more labour intensive in general and has the potential to accelerate employment and income growth.

Trade and foreign direct investment flows between developing Asia and the Pacific and Africa and Latin America and the Caribbean (LAC) have grown substantially. Between 1990 and 2010, imports from Africa and LAC to developing Asia and the Pacific increased from an estimated US$6 billion to US$107 billion and US$158 billion, respectively, while exports from developing Asia and the Pacific to Africa and LAC increased to US$114 billion and US$194 billion from US$5 billion and US$4 billion, respectively. Hence, South-South FDI has accelerated significantly.

However, FDI inflows to the AsiaPac region are volatile and sensitive to global cycles and national factors. UNESCAP warns of financial instability and a further economic slowdown caused by Euro zone debt crisis.

Historically, Asian FDI is mostly infrastructure and extractive industries. Lately, it has broadened to other sectors like agriculture, manufacturing, processing, textiles, services and M&A.

Over the last 5 years, the roller coasting Asian manufacturing-led growth and contractions have affected the demand for primary products. In early 2011, commodity prices peaked. Such short term price volatility hid a longer term commodity boom since 2000, where average annual price growth rates have ranged from 1.8% for beverages to 17.4% for metals and minerals.

Amidst this backdrop, how are Asian ports and shipping operators faring? It’s an interim struggle. While intra-Asia trade volumes per se may bode well for them, they also face other challenging factors. Regional Asia terminal operators are making huge investments in upgrading their port infrastructure to handle increasing volume and larger vessel size, challenging the dominance of stalwart leaders like Hong Kong and Singapore. This is happening at a time when their shipping customer segments are facing financial strains, with vessel oversupply/capacity, oil price increases to more than US$120 per barrel for Brent crude and decreasing freight rates. In 2012, Europe to Asia container traffic is projected to crawl at 1.2%, compared to 8.3% increase in container vessel fleet growth.

While Asian ports can keep improving their operational productivities and adopt new technologies, their niche differentiation strategies may be limited in addressing these macro and margin challenges, just like any other business. They will have to constantly flow and adapt with on-going changing conditions, a.k.a restructuring.


14 Sep 2012, View from Asia, fDi magazine, Financial Times, London.

The largest Asia ICT markets are Japan, China, India, South Korea and Australia.

Investment aftercare is defined by UNCTAD as the range of activities from post-establishment facilitation services through to developmental support to retain investment, encourage follow-on investment and achieve greater local economic impact. Aftercare is a core function by governments in promoting their locations to foreign investors. Three main aftercare types are strategic, operational and administrative services.

Increasingly, value chains are broken with corporate functions like procurement or call centres being offshored or outsourced to Asia. These are some of the ICT investments that Asian governments are courting.

In Asia, aftercare is a mixed picture. Most Asian governments concentrate on short and medium term aftercare like support in ICT staff recruitment, equipment installation, competition legislation, product development, or R&D capabilities. Support of ICT capacity building is critical. Due to the increasing complexity of Asia ICT projects and ICT trends like e-business, convergence, services, commoditisation of connectivity, and standardisation of software, needed ICT skills are in shortage.

An example is China’s Investment Service Centres, which typically provide short and medium term aftercare. China has the most internet and mobile phone users in the world. Although China’s 12th Five Year Plan (2011-15) even highlighted new-generation IT as a new emerging strategic industry with hi-tech development zones and software parks built, the low level of English skills is a constraint in winning business contracts from the U.S. and the EU markets. Software industry in China is still at a primary stage where weak intellectual property protection remains a hurdle for software providers.

A second example is India, Asia’s largest business process outsourcing (BPO) country. In India, foreign MNCs can be found in several ICT R&D and innovation clusters like Bangalore, National Capital Region, Pune, Hyderabad and Mumbai. Top 3 ICT industry verticals are enterprise software, telecom/networking and semiconductor/electronic design. Indian government ICT support include the setting up of government initiatives (19 Indian states out of 26 states have announced new IT policies), high speed datacom links, VC funds exclusively for ICT sector, software being exempted from sales tax or Pollution Control Act, rebate on land cost per ICT job created and software industry being exempted from zoning regulation.

A third example is South Korea. It is the number one market for manufacturing of LCD (Liquid Crystal Displays), memory chips, smart phone manufacturing, ICT development (2011), and e-government readiness (2012). South Korea is the most connected country in the world with its broadband connections and mobile network being the fastest in the world.

However, aftercare support comes in the form of investment ombudsman and aftercare team which provides business counselling and address investor grievances. However, Asian governments have traditionally focused less on long term aftercare, though this too is improving. Only a few governments provide long term services to support firms in becoming strategic leaders, developing centres of excellence, or boosting local R&D.

One example is Japan’s regional ICT cluster development. It has built ICT research parks and incubation centres across various prefectures like Kanagawa, Kyoto and Fukuoka to enable foreign ICT companies to boost their R&D operations.

A second example is the Indian government setting up of ICT institutions like Software Technology Parks (STPs), International Institute of Information Technology (IIITs), and Electronic Hardware Technology Park (EHTPs).

A third example is Australia, which has over eighty public sector research facilities, with National ICT Australia, and the Commonwealth Scientific and Industrial Research Organisation (CSIRO) ICT Centre and Co-operative Research Centres playing a key role in progressing ICT research.

Upshot is that the top-tier Asian ICT markets will continue to dominate while the second-tier markets like Malaysia and Singapore will have to aggressively play catch-up.


9 Nov 2012, View from Asia, fDi magazine, Financial Times, London.

In Asia, green energy has 5 focus areas: Renewable Energy, Carbon Reduction Technology, Energy Efficiency, Clean Energy and Green Building.

1. Renewable Energy: According to the European Photovoltaic Industry Association (EPIA), solar photovoltaic (PV) electricity is now, after hydro and wind power, the third most important renewable energy in terms of globally installed capacity. Europe still leads the way with more than 51 GW installed as of 2011 or about 75% of global cumulative capacity. Asia had 7.7 GW with Japan leading in Asia at 5 GW, USA (4.4 GW), China (3.1 GW), Australia (1.3 GW) and India (0.46 GW).

2. Carbon Reduction Technology: Carbon markets attempts to mitigate greenhouse gases (GHGs) emissions through emission caps, the trading of carbon credits, or a combination of the two. In the Clean Development Mechanism (CDM) market, China and India top the list of countries with the most number of global CDM projects. Some findings suggest that some participating firms are seeking to maximise carbon credits over and above normal production demands. Of the ten countries with the highest carbon dioxide emissions, China tops the list at 6534 MT while India comes in fourth. Carbon credit buyers are now looking at other projects in South-east Asia that include forestry in Indonesia, hydropower in Vietnam and biomass across the region. China is also the world’s leading investor in low-carbon energy technology with investments totalling US$54.4 billion in 2010. In South-east Asia, Malaysia has the highest number of CDM projects. The second largest palm oil producer in the world, Malaysia’s CDM potential lies in biomass and biogas, while municipal solid waste, energy efficiency in power plants and power co-generation are other potential sectors.

3. Energy Efficiency (EE): EE policy instruments in Asia can be classified into three groups: legislative (energy conservation laws and standards), economic (taxes and subsidies) and voluntary (programs, labeling and R&D). UNEP reviewed and assessed such policies and made four conclusions. One, energy laws are not focused on energy efficiency in industry and legislative enforcement is weak. Two, economic instruments to improve energy efficiency in Asian industries are very limited and government fuel subsidies encourage industry to use more energy, not less. Three, voluntary instruments are popular with industries and the most commonly used of the three instruments, but real impacts on energy efficiency are rarely reported. Four, Asian governments mostly do not have a long-term vision for their countries or lack the political will to translate this into concrete and consistent policies. Environmental and social policies at present are developed as ‘band aid’ policies to (partially) offset the environmental and social damage caused by economic growth. This includes most existing energy conservation laws. Asia will be particularly affected by the continuing “Get rich first and pay later” attitude, as most of the world’s population and poor live in Asia and therefore the impacts of climate change will be mostly felt here. India has multi-state DSM (demand side management) programmes and revolving fund for ESCO (energy service companies) projects. Philippines is now developing a standards and labelling framework, looking at DSM best practices and decoupling DSM regulations. Thailand is now considering a EE Resource Standard (EERS) and cap-and-trade for energy saving. Vietnam is now building capacity for ESCOs and developing a standards and labelling framework.

4. Clean Energy: In the Renewable Energy (RE) space, China is considering wind energy development, RE grid connection and administrative management for project development and pricing. India faces infrastructure issues and is trying to integrate off grid RE projects and to incentivise RE self consumption. Philippines is trying to reduce barriers to introduction of efficient vehicle technologies and considering net metering. Thailand is building RE communities, networks, feed-in tariffs and electricity tariffs. Vietnam is in capacity building mode, looking at improving its RE infrastructure and selecting new technologies.

5. Green Building: Four of the five most cost-effective measures taken to reduce greenhouse-gas emissions involve building efficiency. (The measures are building insulation, lighting systems, air conditioning and water heating). Buildings account for nearly one-third of energy use and a similar proportion of total global greenhouse gas emissions. More than half of the world’s new construction is taking place in China and India alone. Studies estimate that these two countries could cut current building energy consumption by 25 percent simply by using energy more efficiently. Similar savings are available for many other Asian economies. Asia now faces a combination of higher energy prices, growing demand for electricity and deepening environmental concerns. Governments are now building power plants to keep up with surging demand from new buildings and their often inefficient air-conditioning, windows and lighting. To improve energy efficiency in buildings, funds are available for building retrofit projects, offering quick paybacks on investments for building developers and their tenants. Singapore is making its mark in the region in green building certification.

This bird’s eye view of Asia’s green energy movement shows promise indeed, a win-win situation for all – governments, companies, citizens and Gaia.


5 Jan 2013, View from Asia, fDi magazine, Financial Times, London.

In Asia, real estate will always be viewed as a preferred asset class by Asians and not suffer from low demand. Asians are willing to pay prices at lower IRRs which foreigners are unwilling to match, with the latter insist on having IRRs of at least 20%.

In the Asia real estate sector, investor sentiment is fairly positive with confidence in Asia’s continuing economic growth that will underpin higher rents and higher capital values. There is also some uncertainty due to concerns of asset over pricing, inventory build-up and identifying assets which offer good risk-adjusted returns besides distressed assets.

Amid stabilising growth in retail spending and office property demand, investors are now focusing on bigger and liquid markets with more and safer core assets like Australia and Tokyo. Asia is also experiencing the rise of niche but smaller sectors like health care, industrial/logistics/distribution facilities as well as assets in secondary locations like Indonesia, Thailand, Malaysia and China’s tier 2 cities.

Retail property sector is still strong. In a recent global poll conducted by CBRE, 70 percent of all shopping centers currently under construction throughout the world were found in Asia, with 50 percent of those in China alone. This is driven by Asia’s strong economic growth, resulting in sustained consumer spending power.

Office property in Asia continues to be a seller’s market. Demand is muted caused by high prices due to small supply of office assets for sale watched by many interested buyers.

Residential property in Asia is expected to slow down due to government regulations being introduced to prevent further home price increases. However, long term fundamental demand for housing remains strong in Asia.

Emerging or developing Asia markets is one major way of reaping attractive returns for investors with higher risk appetites. Favourite countries remain Indonesia, Vietnam, Philippines, Cambodia, Mongolia and Myanmar.

Investment horizon is also lengthening from 5 to7 years to 9 to 15 years, waiting for development yield to stabilise after 3-year leases have turn several times. Investment prospects for 2013 remain good for REITs and private direct real estate investments and fair for CMBS, investment grade bonds and public listed stocks.

Increasing Asia multi-lateral trade and the search for cheaper sources of raw materials and components have spurred FTAs. These FTAs, like AFTA 2015, will have much impact on logistics, the movement of finished goods, components, services and labour within Asia, which lacks good quality logistics.

Some logistics trends include increasing 3PL mergers to handle all of clients logistics needs as well as supply chain optimisation. Logistics hubs are being consolidated while RDCs (regional distribution centres) are being made more flexible. Other areas of improvement include port system productivity, as well as integration of manufacturing and services.

Supply chain technology is improving, with real-time control applications like RFID, natural language processing and data capture technologies.

Asia is also seeing the rise of asset-less 4PLs and development of new services like reverse logistics, service chain management and design for logistics.

However, 2012’s effects of high inflationary pressures and high non-performing loans in Vietnam, Thailand flooding or Japan’s triple shock (tsunami-earthquake-power) has adversely affected some Asia manufacturing, disrupting supply chains or relocation of manufacturing plants. Another potential growth dampener is China’s economic growth, where a slowdown will reduce its demand for commodities and other imported products from neighbouring Asian countries.


14 Mar 2013, View from Asia, fDi magazine, Financial Times, London.

Asia and its emerging economies are once again looking attractive.

One major driver is Asia regional development through institutional transformation. This is characterised by a process of layering, creating new institutions by adding pre-existing ones like ASEAN. Hence, Asia regional economic arrangement continues to grow.

Within ASEAN FTA itself, MITI Malaysia reported that on average today, ASEAN 6 has 99.11% of tariff lines in the Inclusion List at 0. Only 0.35% or less than 1% of the Tariff Lines in the Inclusion list has import duties. For Cambodia, Laos, Myanmar and Viet Nam (CLMV), 49.27% of the Tariff Lines in the Inclusion List are already at 0%. On average, ASEAN member states have 80.34% Tariff Lines at 0%.

In 2015, ASEAN-6 and CLMV will become a complete free trade area. This is very significant. With the reduction and elimination of the import duties, producers/manufacturers can afford to buy raw materials at a cheaper price and better quality from ASEAN countries. This would lead to the reduction in costs of production due to the elimination and reduction in tariff. As a result, prices of products will be cheaper and can compete not only within ASEAN Member States but within other countries as well. In addition, there will be freer movement of labour, components and parts within Asia. This can partially explain the phenomenon of increasing intra-Asia outsourcing, procurement and supply chain shortening.

Intra-Asia trade continues to grow. Today, ASEAN–China Free Trade Area continues to be the largest regional emerging market in the world.

ASEAN countries officially launched negotiations with Australia, China, India, South Korea, Japan and New Zealand on a Regional Comprehensive Economic Partnership Agreement (RCEP) to create a welcoming and competitive investment environment in the region. The negotiations are expected to be completed by the end of 2015.

Discussions on the Trans-Pacific Partnership Agreement (TPPA) continue, with the 15th negotiation round concluded in December 2012. The agreement is expected to include a fully-fledged investment chapter with high standards of investment liberalisation and protection.

A second driver is favourable demographics like growing middle class, young population and urbanisation. Urban household income has risen partly due to profiting from real estate price increases, improving education and wage increase. Parents continue to maintain a high savings rate to fund their own executive education as well as their children’s continuing education. Across Asia, the younger population demand for consumer electronic products continues to be strong. Asia’s labour force continues to work way above the standard 44 hours a week. In many companies, contracts are mostly a mere formality where long working hours are becoming the norm with executives not being paid for overtime work. Wages in Asia have also outperformed those in most other parts of the world, including the Western economies, according to a new report from the ILO. Between 2000 and 2011, wages in Asia almost doubled.

The third driver is the increasingly expansionistic Asia private sector mind set, be they GLCs (government linked companies), MNCs or SMEs. These are not only serving their local domestic markets but expanding into foreign Asian markets. Leadership succession is a serious issue with ageing Asian executives realising their existing businesses cannot rely on old methods, processes, staff and markets. These old guards who have long represented Asian values like ‘endurance, sacrifice, obligation, conformity’ are empowering and encouraging the new aggressive generation of IT-savvy, globally-educated, multi-lingual younger Asian executives to ‘think global, expand regional and defend local’.

Indeed, it is a good time to be in Asia now.


3 Jun 2013, View from Asia, fDi magazine, Financial Times, London.

Asia aerospace and aviation market demand is about US$163 billion in revenue with 652 million passengers and 17.6 million tonnes of cargo in 2011, according to Association of Asia Pacific Airlines (AAPA). Market share of Asian carriers of global passenger traffic was 27% and 41% of global cargo traffic.

Airbus has forecast that increasing urbanisation, growing incomes and the explosion of low cost carriers (LCCs) will lead to demand for close to 10,000 new aircraft from airlines in the Asia-Pacific region over the next 20 years. Airbus said the region will require 9,890 new aircraft out to 2031, valued at US$1.6 trillion. Growing economies, bigger cities and increasing wealth will see more people flying, driving the need for larger and more efficient aircraft. Airbus also predicts demand for 251 new-build freighters which, in addition to 320 converted aircraft, will take Asia’s fleet of freighters from 316 today to 887 by 2031.

On the supply side, traditional and specialised global aircraft clusters were based in locations like Bristol, Bavaria, Los Angeles, Seattle, Toronto, Montreal and Toulouse. Asian LCCs play an important role as the number of routes served by them in Asia has grown six-fold over the last 10 years. Also, international outsourcing has produced international spill-overs and created new poles of growth, mainly in South East Asia. Main spill-over beneficiaries are Asian are tier 2 and 3 producers of products like on-board avionic systems, electronic components and parts and engine accessories. Hence, the bargaining power of such suppliers is increasing. Singapore is Asia’s leading aviation hub and the leader in the aerospace maintenance, repair and overhaul sector (MRO).

Profitability-wise, IATA reported that Asia has been consistently profitable but these profits have become increasingly thin, due to soft cargo markets, high fuel prices and slower economic growth in China. IATA forecast a 5.3% 2013 EBIT margin for Asia. Asia’s airlines made a net profit of US$11.4 billion in 2010, US$5.4 billion in 2011, then US$3.0 billion in 2012 and a slight improvement to US$3.2 billion in 2013.

Major substitute or other modes of transportation in Asia mostly is ground transport. However, most of Asia’s ground transport infrastructure is weak. Also, Asian countries are divided by oceans. Hence, demand for low-cost air transport remains strong.

Regional challenges include regulatory and safety challenges. Inconsistencies remain in level of commitment to regulatory oversight and effective implementation. There is also safety oversight due to lack of effective implementation of critical elements of a safety oversight system. Average compliance levels globally is 60% but some Asian states score as low as 20%.

Despite such challenges, the long term Asian aviation outlook is one of sustainable robust growth, with China leading the growth and India running close behind. Boeing experts said China’s commercial aircraft fleet would grow to 5,980 by the end of 2031 compared with 1,910 by the end of 2011. More than two-thirds of the world’s airports under construction last year were in China. Honeywell reported that India’s aerospace industry is experiencing high traffic growth rates, increased defense spending, a booming commercial aviation industry and rising technological and manufacturing capabilities. Add to this increased market liberalisation, regulatory approval for airport privatization and the support of the Indian government in the demand and supply of defense and civil aerospace products mean India’s aerospace industry is poised for take-off.

Airbus forecast a 20-year traffic growth of 5.7% to 4500 billion revenue passenger kilometre (RPK) from 2010 to 2030, capturing 33% of world RPK by 2030. IATA’s Vision 5050 reported that the 15 megacities in Asia are relatively underserved and promise further substantial network development in the coming decades. Over the next 20 years, the Asia-Pacific region is expected to require 182,300 new pilots and 247,400 new technicians, according to Boeing Co.


25 July 2013, View from Asia, fDi magazine, Financial Times, London.

A city is “smart” when investments in human and social capital and traditional (transport) and modern (ICT) communication infrastructure fuel sustainable economic growth and a high quality of life, with a wise management of natural resources, through participated governance. (Caragliu, Del Bo and Nijkamp, 2011).

UN forecasts an Asia Pacific population expansion from 4 billion to 5 billion by 2050 will occur mostly in cities, resulting in rapid urbanisation. Asian city urban planners will need to consider if their city should adopt a “smart” city strategy at the policy design stage, since the vast majority of Asian population lives in rural agrarian areas.

The benefits touted by “smart” city concept salesmen and service providers from mostly developed Western economies seem attractive initially: harnessing new greenfield technology to empower citizens, businesses, and governments to transform cities into healthier, greener and richer places to live in.

However, as with any new catchy proposed ‘revolutionary’ model or concept, there may be negative and externality effects across urban planning’s three major arenas of land policy, housing and land use planning.

For Asian cities evaluating a “smart” strategy, not all long-term unintended intangible effects can be identified or quantified in a cost-benefit analysis.

Impact of developing new technological and networked infrastructures may also be adverse or insignificant to the majority of city dwellers. In training “smart” citizens, the shifting of core educational skills to reflect more “smart” components may benefit only the minority of Asian citizens employed in ICT sectors.

In land use planning, the redevelopment of slum areas and relocation of Asian dwellers for new “smart” satellite or cluster development without granting of land titles may not necessarily result in urban poverty alleviation, increased public housing or wealth creation.

Other promising urban development alternatives may be overlooked if Asian cities focus narrowly on trying to be “smart”. Land use for greater industrial economic development may be better utilised if it benefits the majority of city dwellers rather than just a narrow “smart” niche segment.

There are other unexplored policy areas like “smart” sustainability, meeting energy demands, taxation, funding, and overall wealth creation for the country.

Finally, the collection of institutional arrangements, powers and resources that constitute an explicit programme for the management of “smart” land use, housing, and education, Asian city planners have to address the regulatory, developmental, and financial aspects before granting carte blanche to going “smart”.

Currently, there are only a few Asian cities that can be considered truly as “smart”. Perhaps that’s their competitive advantage. “If it ain’t broke, don’t fix it” may be good to avoid excessive modernist planning for wide-scale implementation. It’s always about enhancing the majority of the people’s welfare, not adopting the latest academic or business concept to benefit only a few.


23 Aug 2013, View from Asia, fDi magazine, Financial Times, London.

Several surveys indicate in decreasing order that Shanghai, Hong Kong and Singapore are MNCs’ top 3 favourite AsiaPac regional HQ locations. Top 5 criteria include proximity to markets, favourable legal and regulatory environment, a stable and favourable political environment, favourable business environment and favourable tax environment.

Over the next 5 years, it is likely that Singapore will remain the favourite South East Asia regional HQ location while Shanghai will be the favourite AsiaPac HQ due to proximity to the larger China market.

However, in today’s rapidly shifting competitive landscape, the dominance of these 3 cities are not iron-clad.
Game-changing factors constantly undergo fine tuning with occasional wild cards arising.

First, upcoming tier 2 cities could significantly improve the key attraction criteria like hub or cluster upgrading and development. Malaysia’s Iskandar regional hub contains 9 economic clusters with supporting industries with a vision to be a strong and sustainable international metropolis. The establishment of clustered economic development zones, high tech enclaves, and industrial parks are part of ADB’s recommended Strategy 2020 developed in 2008. This is a long term strategy using city cluster development (CCD) as a tool to spark overall economic growth. State and city planners can now test and manage innovative city cluster (CC) types like urban corridors, megacity-dominated clusters, subnational CCs, transborder CCs, and SEZs. The effectiveness, efficiency and acceptance by MNCs of the CCD will take time to evaluate.

Second, state and city planners can also use public finance management tools and incentives to continue making their locations attractive. Concessionary corporate income tax rates in Asia are already reduced to near rock-bottom between 15% to 17% for companies which enjoy Regional HQ status. Subsequently, the only way to manage public finances with reduced corporate income taxes is to incur more government debt, shift higher tax burden onto consumers, raise non-corporate income taxes and minimise transfer payments. Such short term gains come with future unintended long term consequences.

Third, changing economic growth directly affects consumer spending, Businesses which target more on the Asian consumer segment and locate close to these markets will be significantly affected in the short run unless they commit to ride out short-term dips and focus on the long haul. This long-term strategic focus versus short term ROI accountability to stakeholders is by itself another big challenge.

In the competition for Asian locations to attract FDI as Asia HQs, it is clear that Keynesianism and not Adam Smith’s ‘invisible hand’ is the winner in the eyes of TNCs and MNCs. What is less clear is whether ADB is the crowned ‘Asian Keynes’ guiding Asian urban economic development and growth?


23 Nov 2013, View from Asia, fDi magazine, Financial Times, London.

Mention “film” and Hollywood comes to mind. How is the Asia transmedia industry? This topic came to my mind as I was busy starting up a new Hollywood transmedia franchise.

MPAA (Motion Picture Association of America) reported that in 2012, global box office for all films released is worth US$34.7 billion. Regionally, US and Canada market was first, grossing US$10.8 billion. EMEA market (Europe, Middle East & Africa) was US$10.7 million. Within Europe, UK and France each grossed US$1.7 billion and Germany US$1.3 billion. Russia grossed US$1.2 billion.

In third place was the Asia Pacific market, growing 15% to US$10.4 million, leading international box office growth for all films released in 2012. Chinese box office grew by 36% to US$2.7 billion in 2012, moving it to the largest international market ahead of Japan (US$2.4 billion). India grossed US$1.4 billion, South Korea US$1.3 billion and Australia US$1.2 billion.

So what?, you might ask. Plenty. Now as a film Exec Producer and a transmedia director, the multiplying effect can be significant from an FDI viewpoint.

Financially speaking, film economics require that total cost of production must include not only tax credit incentives but also overall cost of living and procurement for entire crew cast. Attractive tax credits can reduce a location’s attractiveness by the latter. This explains why much filming has been conducted outside the traditional North American location, resulting in jobs and FDI foregone.

Major non-financial factors include quality of production crew and government regulatory requirements. Amiable production deals, which could have been easily agreed upon between film and executive producers, are easily hampered or broken by excessive unnecessary regulations which add to delay and costs. An intangible issue is the liveability quality of locations, which alone can deter A-list actors or even producers from agreeing to a deal.

And these issues are just for film alone, excluding other transmedia products like books, gaming applications, digital contents, and other merchandise products like clothing and toy figurines, which have their own set of complications and opportunities.

Film spinoff products can also generate huge multiplier and counter-cyclical effects. In the US, consumer spending on games alone grew from US$10.5 billion in 2009 to US$20.77 billion in 2012, employing more than 32,000 people in 34 states. Gaming console and accessories manufacturing is significantly being produced in Asia and the potential for games and gaming application development in Asia still has a huge upside. China is now the world’s largest online gaming market over US$3 billion, contributing one-third to the global revenue in this sector in 2009, or 56% of the Asia Pacific total.

The main issue for governments is to review and fine-tune their media policies to effectively capitalise on Asia’s rising demand for film (15% annually) and media products, helping media producers to achieve their business model and KPIs. Asia’s supporting film industries can benefit if transmedia clusters or hubs can be enhanced, attracting world-class companies there, growing transmedia competencies, jobs and revenues.

“Lights, Camera, Action!”


25 March 2014, View from Asia, fDi magazine, Financial Times, London.

My last column on Asian SMEs was in Nov 2006 when I wrote: In Asia, SMEs provide 70% to 80% of national employment with big MNCs and governments providing the rest. Asia SMEs spend much of their time growing their domestic businesses and sometimes are ignorant of better pastures overseas. Armed with good overseas market information, the few Asia SMEs who dare to venture beyond their crowded shores stand a better chance of survival and growth than coping with national and regional business landscapes.

I am sure that the recessions and after-shocks from 2008 to 2010 have caused many casualties among SMEs yet concurrently opened up new opportunities for others. Such is the inevitable business cycle of change.

And times have indeed changed.

On the macro level, the larger government, NGO umbrella organisations and FTAs like ASEAN, World Trade Organization (WTO), Asia Pacific Economic Cooperation (APEC), Asian Development Bank (ADB), AFTA and others continue to fine-tune the broader country level cooperation, the institutional players like financial institutions and SMEs themselves are also working hard to help long term sustainable productivity and growth of Asian SMEs.

With improved regional Asia market access caused by reduced intra-Asia trade barriers and FTAs, improving regional economic conditions, better technology, as well as improved access to financing like crowd-funding and more credit facilities, more Asian SMEs have ventured beyond their smaller domestic markets while benefiting from increased household incomes from an increasingly higher educated, tech-savvy younger workforce amidst greying older population. Speed of working, information and networking has increased, ranging from educational tools, home broadband, social media to personal communication. Regional Asia and global travel has also exploded due to growing affordable air travel from budget carriers. Trans-Asia labour migration has also increased. Step into any major Asia city shopping mall and it’s the same everywhere: both retail service assistants and shoppers are from all over Asia, not as relatively homogeneous as it was a decade ago.

The Asia Strawberry Generation (estimated to be 660 million upwardly mobile and ultra-connected Asian Gen Y born between 1978 and 1994) as the core of Asia customer base of Asia’s 4.3 billion population is being exposed to more affordable Western education, Western media and culture, blending their IT-savviness to be groomed as future business executives and to take over their ageing parents’ SME businesses. Though less independent from their Western counterparts from 16 years old till their late 20’s and even early 30’s, the Asia Strawberry Generation continues to receive much conservative Asian parental savings (above 30% compared to less than 15% in Europe or 4% in the US), support and provision, be it education, consumer products, fashion, travel, business start-ups or legacy inheritance. This is a fundamental Asian characteristic which any strategic planner and marketer must recognise before and when doing business in Asia. Retail products and services like higher-end luxury or fashion items, F&B outlets, consumer electronics, smaller-unit cars and apartments continue to sell well and expand exponentially across Asia to cater to this growing segment.

The outlook of Asian SMEs thus largely depends on the extent to which they can constantly evolve their service and produce offerings to satisfy this Asia Strawberry Generation around whom businesses revolve.


24 May 2014, View from Asia, fDi magazine, Financial Times, London.

Asia Pacific energy demand will grow at an annual average rate of 2.4% until 2030, more than double the world’s average over the same period. Solar photovoltaic (PV) technology is the fastest-growing power generation technology globally. Capacity additions are coupled with declining production costs of solar plant components due to rapid technological advances.

The Asian Development Bank (ADB) reported that while developed nations have accounted for about 87% of the world’s installed capacity so far, Asia Pacific offers exponential growth opportunities for both large-scale grid and off-grid applications.

First, there is huge Asia market potential with exponential growth prospects and development co-benefits. Large parts of Asia are on prime equatorial and tropical land, enjoying some of the world’s highest solar insolation levels and boasting significant solar energy generation potential.

Second, national programmes in Asia are already promoting solar energy as a mainstream energy source. These include India’s Jawaharlal Nehru National Solar Mission, China’s Golden Sun Program, and Thailand’s Small Power Producer scheme for renewable energy.

Third, simple, easy-to-operate technology enables the operation and maintenance of solar PV and solar thermal (i.e., low temperature) applications to be less cost-intensive than conventional technologies.

Fourth, there is significant potential for high-cost electricity replacement. Solar energy development provides an excellent opportunity to replace expensive fossil fuels in situations where the demand is remote and distributed, and where grid development and centralized generation are not possible.

Fifth, the aftermath of the Great East Japan Earthquake resulted in Japan’s Feed-in Tariff (FIT) Scheme for Renewable Energy. This Act obliges Japanese electric utilities to purchase electricity generated from renewable energy sources within Japan and across Asia. One benefit is the promotion of government-approved generation of renewable energy sourced electricity in Asia.

Challenges exist, however. There remain constraints in transmission and distribution grids. The distributed and remote nature of renewable projects limits their coverage through existing transmission grids. A second challenge is that the steep up-front cost of solar projects, high borrowing costs, and the lack of access to long-term capital are stalling solar energy growth. Third is that the availability and cost of long-term debt remains one of the biggest challenges for solar energy project developers in Asia. A fourth challenge is that weak institutional capacity of government is viewed as risky by investors hesitant to commit to projects that rely exclusively on support mechanisms that are not well developed, have shorter durations, or are likely to change over time. Fifth challenge is inadequate coordination of knowledge management activities, resulting in information gaps. This in turn results in inadequate project preparatory measures and insufficient data on solar insolation and climate conditions that influence the output of solar power generation. In May 2010, ADB launched its Asia Solar Energy Initiative (ASEI) aiming to accelerate solar energy’s progress toward grid parity.

Once such solar energy development challenges are gradually addressed, Asia will also benefit from improved social and rural development enabled by decentralized solar power generation for remote and rural communities and from the economic benefits contributed by indigenous solar manufacturing and ancillary industries.


30 July 2014, View from Asia, fDi magazine, Financial Times, London.

The shooting down of Malaysia Airlines flight MH 17 over Ukraine suddenly cast the world spotlight and business attention on Russia, the world’s eighth largest country by GDP and supplier of 12 percent of global energy.

On July 23, Russia deems cooperation with the Asia-Pacific Rim as its key priority, Prime Minister Dmitry Medvedev said at a meeting with trade representatives. He added that Russia might change the structure of its trade missions in accordance with the current trends.

RT reported that the East, not West, is Russia’s top 5 trade partners in Asia and that Western sanctions will continue to push Russia towards Asian markets which are growing faster.

According to 2013 Russian Foreign Trade Statistical Bulletin, Russia’s major Asian trade partners are, in descending order, China, Japan, Turkey, Kazakhstan and South Korea. China has much energy trade links and wants to shift its polluting coal-based energy towards clean energy like natural gas and oil which Russia has.

Asian investors are interested in Russia’s infrastructure development projects and the oil and gas sector.

The Kremlin announced in April that Asia investment will likely be further spurred by a special economic zone (SEZ) in Russia’s Far East city of Vladivostok, which was set up in June 15. Another SEZ being built is in Moglino in the north-west region of Pskov, which needs automobiles, consumer electronics, railway engineering, construction materials, logistics, packaging materials and agricultural equipment.

With lower labour costs and government incentives, good geographical locations, natural resources and developing infrastructure, Russia does offer these attractions to investors. Also helping to attract Asia FDI (foreign direct investment) is the political neutrality of Asia investors.

In turn, Russian companies have also begun re-shifting their attention away from the US and Europe and more towards Asia, starting with oil and gas investments. Other Russian companies like railway, mining and retail companies also plan to conduct Asia investor search to fund their greenfield and acquisition projects, boosting investment activity in investment banking, private equity and other financial services.

Amidst the media portrayal of Russians as stereo typically surly and unsmiling, it is worthwhile to look beyond such cultural factors and transitory political vibrations. Investing overseas, whether Russia or elsewhere, is not for the faint hearted. Having performed all due diligence and analysis of risks and attractions and ROI, Asian investors who dare to make the first mover moves and partner with reliable Russian partners can potentially grow their businesses.

Long term Asia-Russia business outlook certainly is promising yet carries interim hiccups and risks, again an old story applicable for all businesses. One can lose everything while another can gain much. The comfortable conservative need not venture outwards and can just safely swim within their national shores.


28 Sep 2014, View from Asia, fDi magazine, Financial Times, London.

A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country’s typical or national laws. The category ‘SEZ’ covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. A free trade zone (FTZ) is special class of SEZ, an area within which goods may be landed, handled, manufactured or reconfigured, and re-exported without the intervention of the customs authorities.

In Asia, SEZ development is a mixed bag, ranging from mega one, developed ones to nascent ones.

New special economic mega-zones (SEMZ) are emerging to overcome the traditional enclave-like character of SEZs and accommodate the trend towards global production networks.

Batam (Indonesia), Hong Kong and Singapore are island cities which function as one large FTZ.

Indonesia’s existing FTZs are in the Riau Islands of Batam, Bintan and Karimun. The Indonesian government in early 2014 announced its plans to develop three areas into new special economic zones to be located in Morotai (North Maluku), Tanjung Api-Api (South Sumatra) and Mandalika (West Nusa Tenggara).

China has 5 city SEZs, 1 provincial SEZ, and 14 Coastal Development Areas. Currently, the most prominent SEZs in the country are Shenzhen, Xiamen, Shantou, and Zhuhai. It is notable that Shenzhen, Shantou, and Zhuhai are all in Guangdong province, and all are on the southern coast of China where sea is very accessible for transportation of goods.

South Korea has 8 SEZs (called Free Economic Zones or FEZs). India, as of 1 Sep 2014, has 564 formally approved SEZs and 192 operational. Bangladesh has 9 EPZs. Cambodia and Philippines each has 11 SEZs, Kazakhstan has 10 SEZs while Laos has 9 SEZs and a VITA Park.

Malaysia has 3 zones called economic corridors: East Coast Economic Region (ECER), Iskandar Malaysia in Johor, and Northern Corridor Economic Region (NCER).

Brunei has no SEZ yet, like Thailand, Japan and Mongolia. Thailand plans to set up 6 SEZs in 5 provinces. In March 2014, Japan announced it was pursuing economic reforms by setting up 6 economic zones. Mongolia participates in Rason SEZ set up by by the North Korean government (DPRK).

Taiwan in 2013 set up 1 SEZ in Kaohsiung. Myanmar currently have 3 SEZs under development: Dawei SEZ, Thilawa SEZ and Kyuakpyu SEZ. Vietnam has 18 coastal EZs under construction. However, the existing EZs cannot compete with the free EZs in the region because special mechanisms, both in socio-economic and administrative management, cannot be applied in the EZs due to problems in the legal framework.

ADB reported that some SEZs in Asia produce benefits like rapid employment growth, especially for women, increased exports, and boosted skills and technology transfer.

The supply of FTZs has so exceeded the demand, with number of operational FTZs being lesser than approved ones and having less activities than envisioned. Challenges and failures include inadequate infrastructure (e.g. absence of main port, limited road network), low net exports, poor linkages, unclear cost/benefit structures, administrative barriers and social issues (including providing a cover for corrupt and illegal business practices). In turn, these failures were attributed to public sector development, uncompetitive policies, lack of integrated development procedures and controls, and inadequate institutional infrastructure.

The most profitable locations for SEZs in Asia have been found in the immediate hinterlands of global gateways. Gateway locations provide the largest market for skilled labour, have the most frequent national and international transport connections, have the most accessible information and offer cheapest search costs.

Increased regional economic integration yields opportunities in Asia FTZs. These include mostly PPP large-scale infrastructure (e.g. new ports, roads, railways, bridges, transmission pipelines), power stations, water supply, logistics, transport, communications, water supply, drainage and sewerage.

In all these Asian countries, the tax base is concentrated in the capital cities. Good governance is needed for reallocation of scarce investment funds and to attract private equity for PPP projects to rural and up-country districts.


3 Nov, 2014 View from Asia, fDi magazine, Financial Times, London.

In Asia, so much had happened in 2014, primarily air and maritime disasters plus street demonstrations. So, what is Asia’s 2015 economic outlook? Almost like 2014, where bigger richer economies slow down but remain steady while smaller poorer ones grow faster. Asia is projected to grow steadily between 4.5% to at 6.4% in 2015.

In North Asia, China’s slowdown grow at 7% still retains its position as Asia’s top economic performer. Beijing will continue to exert its economic power in Asia as a manufacturing base, importer and investor in overseas assets, un-dislodged by the US, whose Obama administration is unlikely to ratify the Trans Pacific Partnership (TPP) by Dec 2015. Shanghai will rise as a significant financial centre, attracting more ancillary businesses and releasing more growth-enabling credit and capital available to businesses based there.

With sound fundamentals, both Hong Kong and Taiwan project a 4.37% growth in 2015, though some have projected that Hong Kong will see a slower revised 3.1% growth due to disruptions caused by the protest movement.

Japan’s 2015 growth, supported mainly by external demand, is forecast at a sluggish 0.8%, slowing down after a consumption tax increase was imposed in Spring 2014, which will further increase to 10% in Oct 2015. Tokyo and Osaka will expect to experience a significant reduced public investment, restrained new corporate capital investment and weak consumer spending.

South Korea’s mood was darkened over the April ferry sinking, and the economy is expected to grow moderately at 4% in 2015 from weak domestic demand as consumption and investment have yet to fully recover.

Like South Korea, Taiwan and Australia in 2015 are expected to grow between 3% to 4%, dampened by sluggish demand from EU.

Malaysia is accelerating public investment on infrastructure projects, targeting a 6% growth in 2015.

India’s urbanising economy is projected to grow 6.4% in 2015, with value of its economic output to increase by about the same as ASEAN’s output. India’s top city GDP contributor is Mumbai. Mumbai will continue to be India’s economic powerhouse, industrial hub, entertainment and fashion capital, contributing to 25% of India’s industrial output and 70% of maritime trade.

Philippines and Indonesia in 2015 are expected to grow favourably at 6%, where growth is expected to be driven by domestic demand, given still-favourable financial conditions, healthy labour markets, and strong export growth.

Thailand’s growth in 2015 is slower around 4.5% caused by months of political turmoil.

New Zealand expects a 3.9% growth in 2015 due to upward trends in commodity prices, business confidence, hiring and plant investment.

Australia expects a 3% growth in 2015, with a general pick-up in demand offsetting declining investment in the resource sector.

Brunei expects a GDP growth of 1.2%, driven by a gradual expansion of the non-oil and gas sectors and some recovery in oil and gas production.

Smaller emerging Asian countries are projected to grow faster than their bigger developed neighbours. Projected 2015 growth rates include 15% for Papua New Guinea (new energy exports), 11% for Macau (new casino development), 7% for Sri Lanka (growing construction and export sectors), 6% for Cambodia, Myanmar and Vietnam (due to outsourcing of low-cost, export-oriented manufacturing from richer economies),

While defending businesses in bigger Asian markets, it’s time to go deep by conducting research on smaller countries, tier 2 cities and evaluate local partner companies’ performance to keep growing in new markets that have been long ignored.


In assessing which is an optimal Asia investment destination, some of the hard factors are relatively easy to identify, measure and evaluate for destination comparisons. These are the country-level macro indicators like economic growth rate or tax rate and industry level indicators like sector growth rate. However, company level indicators are more difficult to obtain as Asia does not have a uniformly consistent or comprehensive set of registries or databases. Hence, most of the private and confidential Asia company level information resides in the heads of primary decision makers and influencers, which explains why one-to-one B2B depth interviews will continue to be the most effective way of conducting company research in Asia which no database, report or software intelligence tool can displace to gather such sensitive information. Most of the publicly available reports containing generalised recommendations on Asia investment destinations are unfortunately based largely on quantifiable hard data and not customised for each investor company. Even so, this depth interview primary research method carries a subjective element due to broad estimates in the event that company executives refuse to disclose their P&C information. This is a reason why information asymmetry and lack of disclosure will always be a source of business forecasting, ambiguity and risk in Asia. In search for reliable cluster of service providers and suppliers, due diligence has to be regularly practised by neutral third parties to narrow down the guesstimates to acceptable levels.

Companies are advised not to base their multi-million dollar investment destination decisions solely based on cheap hard factor information, which shows only a partial picture of a destination’s attraction, strengths and weaknesses. Some business executives wisely allocate only a small weight to information provided by the host destination’s city officials, to avoid bias from showcasing of strengths only. These executives also know the very limited usefulness of Western tools and techniques like competitive intelligence, which works in the West because information there is much more publicly available than in Asia, offering more reliable data extrapolation.

Soft factors, particularly from an institutional players’ viewpoint, are even harder to objectively measure. There is progress being done in measuring some indicators like quality of life, worker satisfaction, etc. However, other soft factors remain a holy grail. How do we tell if a country’s top political leader faces what extent of difficulties in controlling legislative agenda to protect foreign investment and honour existing investment laws, the level of unity in a country governed by two or three coalition parties, how much is a destination’s command of emotional resonance as part of their unique selling proposition to global investors, how militant and strike-happy a workforce is to disrupt operations, or how trustworthy are relationships to narrow the gap between a signed contract and effective implementation? Again, due diligence is one effective solution to verify stated claims. For a client contemplating a JV with a local manufacturing partner, we even had to quietly and discreetly check on the CEO’s background, his stated political and business connections, his company’s production ability to handle different product lines, the customers’ satisfaction level with their products and other criteria before making our recommendations.

In the absence of perfect knowledge, making a decision to locate in a particular Asia investment destination based on incomplete, subjective and imprecise estimates is unavoidable. A rough guess is better than no guess. In Asia, the soft micro level information is often more important than the hard macro level information.


30 Mar 2015, View from Asia, fDi magazine, Financial Times, London.

Asia’s drug industry is estimated to be worth US$170 billion with a 12 per cent annual growth rate.

Growing Asian economies and populations are the main factors which continue to drive the demand for new therapies.

Companies are thus expanding their R&D networks and public private partnerships, undertaking research to improve their knowledge of strategic business opportunities in Asia, understanding the differences in Asian markets and diseases, and developing therapeutic curatives customised for Asia, shifting some of their global manufacturing and supply chain emphasis to Asia. Some of these products include antibiotics, hormones, alkaloids, reagents, glycosides, vitamins and vaccines.

Governments in Asia are also developing their R&D infrastructure and capabilities to support their countries’ biotech and pharmaceutical industries.

As a result, Asia is experiencing more product introduction and growth of contract research organization (CRO) providing services as biopharmaceutical development, biologic assay development, commercialisation, preclinical research, clinical research, clinical trials management, and pharmacovigilance.

These developments positively impact the Asian financial services sector also, as some of these firms raise financing on the Asian stock exchanges and other financing and investment modes.

Challenges facing Asia biotech and pharmaceutical industries include rising costs caused by expiring drug patents, growing government regulations and monitoring on these sectors, and demand for environmentally-friendly manufacturing practices.

In the medium term, Asia biotech and pharmaceutical industries continue to face a healthy outlook.