ST: Local firms continue to expand strongly overseas: IE Singapore

Overseas investment by local companies last year was $31.7 billion
By Jonathan Kwok

SINGAPORE firms continued to expand strongly overseas, especially into emerging markets, according to International Enterprise Singapore yesterday.

Local companies directly invested $31.7 billion overseas last year, a 9.7 per cent increase over 2010.

IE Singapore assisted companies on 336 overseas projects last year, with two-thirds occurring in emerging markets such as Indonesia, Vietnam and the United Arab Emirates.

China recorded the most interest, accounting for 104 overseas projects, a 50 per cent increase since 2009.

In all, IE Singapore was approached by more than 34,400 companies looking to internationalise last year. It disbursed $926 million in financing loans and $60.2 million worth of grants to over 5,500 companies under its various schemes. 'It is critical for Singapore companies to look at internationalisation as a long-term competitive strategy,' said IE Singapore chief executive Teo Eng Cheong.

'A global footprint enables companies to build resilience against uncertainties, access new markets, tap on resources and become globally competitive.'

Mr Teo added: 'It is not a question of whether we should venture into these markets, but how quickly and effectively we do so.'

The latest figures available, at the end of 2010, showed that Singapore companies have invested a combined $393.3 billion abroad, 8.9 per cent up on 2009.

The combined overseas investments stood at 127 per cent of Singapore's annual economic output, from 60 per cent in 2000.

Statistics Department data showed that at end 2010, Singapore firms were most heavily invested in China. Other large investment destinations were Britain, Malaysia and Australia.

The trend may continue this year, with firms continuing to expand overseas or crafting plans to do so.

Education group Adam Khoo Learning Technologies started preparing to expand into China late last year and expects to increase its investment this year. 'We want to extend our youth training business there,' said chief executive Patrick Cheo. The company started expanding overseas just two years after starting up in 2002, and has offices in Indonesia and Malaysia and franchises in India, Dubai and Vietnam.

Mr Cheo cited the large overseas markets as a major reason for the expansion.

'Singapore is too small for the business,' he said. 'A lot of our intellectual property, and the decision makers and the management team are based here. But we do a lot of the support work and training overseas.'

About 80 per cent of the company's revenues are from Singapore, with the rest from foreign markets. Its long-term vision is to have 50 per cent of revenue from overseas.

The IE Singapore data showed that external trade also rose last year. Singapore's 8 per cent trade growth surpassed the World Trade Organisation's world merchandise trade growth forecast of 5.8 per cent. Export of goods grew 7.5 per cent, while export of services grew 4.8 per cent to reach $142.9 billion.

Singapore's global trading operations also grew strongly, with offshore trade rising 45.6 per cent to reach a turnover of $1.29 trillion.

Source: Straits Times