As an imminent economic downturn looms over the business landscape, 2016 is expected to be no smooth sailing for Singaporean firms. In this interview with The Columnist, Lawrence Chong, CEO of Consulus, expresses his deep concern in the way many local businesses have become over-reliant and too complacent. He explains how these firms are only on the brink of collapse if they continue depending on the government’s saving grace. What is truly needed is a transformation of their business models.
What is your wish for Singapore in 2016?
My wish for Singapore is for us to be able to weather the economic downturn in 2016 and for companies here to use the opportunity to rethink their business models. This would only put them in a better position to weather future storms. As the world becomes more integrated, we have to expect more turbulence in the system. Therefore, the only way for companies to be prepared for more upheavals is to redesign their business models.
What will be the most significant event in 2016?
It will have to be the national budget presentation by the new Finance Minister Heng Swee Keat on the 24th of March. Although this will be his first Budget as a minister, his background as the former Managing Director of the Monetary Authority of Singapore will serve him well. Minister Heng is also leading the restructuring of Singapore’s future economy. Besides, notable events such as the ruling party having emerged fresh from a strong electoral victory, the global economy facing a near collapse in oil prices, and the slowdown in China have all made firms in Singapore exert tremendous pressure on the government to do more. It is not a coincidence that the largest business federation here, the Singapore Business Federation, has taken an unprecedented approach in presenting an extensive paper detailing the challenges and solutions for the government to consider in helping Singaporean companies meet the challenges and expand overseas. With so many demands, all eyes will be on Minister Heng.
What challenges does Singapore face?
With this year being the 51st year of our independence, we are really at a generational shift with regards to our economic model. Few countries had the benefit of having a good mix of political leaders with a good set of skills in politics, economics and law. Mr Lee Kuan Yew commandeered and drove the political will while Mr Goh Keng Swee developed some of the most enduring economic ideas which resulted in Singapore’s economic success. The economic purpose then was clear: in a region of turmoil, Singapore would provide a stable and accessible business environment. The government invested and took the lead to prove to global companies that Singapore had the chops to deliver excellent infrastructure and services to support their investments. These led to the formation of large government-linked enterprises, such as PSA, Keppel, DBS, SIA, and others. While the innovation part was left to the foreign firms, if you needed anything to be made, refined, transacted and transported, Singapore can guarantee you an excellent follow-through. Many SMEs thrived on this model too, by supporting global firms in their growth story. Fast forward to today, despite our neighbours having adopted the same approach, Singapore is still winning on the global investment front. According to the UNCTAD 2015 World Investment Report, Singapore is the 5th largest recipient of FDI in the world and the 3rd largest among the East and South-East Asian countries.
If this seems to be good news, why then are local companies crying for help? While the economy has expanded, manpower and rental costs have continued to climb while profits have dropped and the Singapore stock exchange has performed the worst among global bourses in 2015. Consequently, many companies have turned to the government to ask for help, but the question is how much more of a difference will it make? As of now, government assistance to local companies seeking help in transforming their business and internationalising is already extensive. Total annual grants amounting to hundreds of millions of dollars are readily available to companies here to cover almost every aspect of a business’ needs – from research, human resource development, design to even sourcing for partners overseas. But as the saying goes, ‘you can lead the horse to the water, but you cannot make it drink’. I know of too many good companies who did not make use of the better times to expand their businesses overseas as they are highly dependent on one market – Singapore. And yet such local companies have witnessed other Singapore companies like Goodrich Global, BreadTalk and Kingsmen expand overseas and find success. These companies are not government-linked but have managed to expand into different markets so that they can secure a more balanced and realistic future for themselves. And in recent years, we have seen inspiring cases like that of Min-Liang Tan, the CEO of the billion-dollar gaming company Razer. More Singaporean entrepreneurs from the tech sector are popping up. Companies like Goodrich Global, Breadtalk, Kingsmen of the earlier days and Razer of today are blazing new trails and creating value by branching out early (Razer is now based in California). So in this generational shift, there are 2 classes of entrepreneurs: one that is waiting for the government to think differently for them while the other that has proven and demonstrated that by thinking different about their business models and spreading their wings early, they can shape the world.
“What I fear is complacency. When things become better, people tend to want more for less work.” – Lee Kuan Yew
My bet is that the earlier class will fade out eventually as they have lost the fire and motivation to succeed. The latter is emerging as the aggressive “Singapore Lions” that is ready to shape the future. Perhaps the earlier class became highly complacent as a result of a hard-working government but if they wish to survive, they have to wake up and be bold lions to take the step forward to expand. This is something less to do with the government and more to do with personal mindsets.
What is the one opportunity that outsiders are not aware of?
Singapore has always been portrayed as a shiny and modern metropolis but in reality, due to our long history as a city of immigrants, we have a rich and old heritage of excellent food from a multitude of cultures. And you can only find most of this great food in the heartlands where most Singaporeans live. The sad truth is, many of the chefs who can cook up an amazing Nyonya Assam Pedas Fish or traditional Asian egg tarts are getting old. Within the next 10 to 15 years, many of these favourite and regular haunts will disappear and so someone better come and learn these traditional Asian recipes before all is lost.
What dish will you recommend to someone who visits your country for the first time in order to introduce your culture and why?
Well, life is nothing without spice. So if friends were to visit me in Singapore, I will bring them to eat our famous chili crab and then make them down it with Tiger beer at the beach.
It spices things up, gets messy, and after a round of beer, everyone will start pouring out their life stories. In a way, Singapore started like this when everyone who wanted to seek a better future came to this tiny island. It is the rich mix of different cultures which made Singapore into a hot dish. And all of my friends who have ever tasted chili crab will always remember it. Similarly, Singapore is relevant if it stays memorable with a little bit of spice.