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03 Dec 2020 Updated 08 Dec 2020

As economies rebuild for a more sustainable future, opportunities abound

The Business Times

 

Mr Hoe: There are many opportunities for firms here to internationalise, as well as to speed up the pace of their digitalisation efforts.
PHOTO: ENTERPRISE SINGAPORE 

WITH the Covid-19 pandemic still raging on around the world, companies in Singapore - both the big boys and the smaller players - are feeling the effects of the vast disruption caused to their businesses and industries.

Still, there are many opportunities for firms here to internationalise, as well as to speed up the pace of their digitalisation efforts.

Clarence Hoe, global market director (Americas and Western Europe) at Enterprise Singapore (ESG), gives his take on why companies should go global even in an economic downturn, and how they can take advantage of the European Union-Singapore Free Trade Agreement (EUSFTA) to penetrate the lucrative European market.

Q: What is the importance of internationalisation amid the Covid-19 pandemic? Should companies still pursue internationalisation?

Covid-19 has become the crisis of our generation, and brought about unprecedented disruptions to the way we work, live and play.

The global economy is undergoing fundamental shifts and presents internationalisation opportunities which Singapore companies should seize to stay relevant and ride the eventual recovery.

First, governments and companies around the world are intent on developing resilient operating models to mitigate against future disruptions. Singapore companies with customers in Europe could consider setting up regional distribution centres in European Union (EU) countries with well-developed transport, logistics and distribution ecosystems, such as the Netherlands or Poland.

Second, accelerating the pace of digital transformation is another area where opportunities abound in an increasingly inter-connected world. To support the participation of Singapore trade associations and companies in virtual trade shows, ESG has expanded the scope of its Market Readiness Assistance and Local Enterprise and Association Development programmes.

Finally, as economies around the world rebuild for a more sustainable future, this opens up new opportunities.

For instance, the European Commission will be pursuing a European Green Deal to make Europe the world's first carbon-neutral continent by 2050. Singapore companies supplying to European companies will need to better understand their carbon footprint, while those developing sustainable products will find a growing market in the EU.

Q: How can Singapore companies better position themselves to capture opportunities in the EU?

Singapore companies are recognised for their reliability and quality, especially in products such as medical devices, automation and digitalisation solutions, and advanced materials.

In recent years, Singapore startups have also built up a track record of collaborating with European corporates on open innovation projects. Singapore companies keen to capture opportunities in the EU should consider these three approaches:

Leverage the EUSFTA

The EU is the world's largest single market with GDP of 13.9 trillion euros (S$22.4 trillion) in 2019, and is Singapore's fourth largest trading partner for goods.

Under the EUSFTA, Singapore companies will benefit from greater access to the EU single market, increased government procurement opportunities, and the progressive elimination of tariffs on exports of made-in-Singapore products.

Leverage ESG's initiatives

Even while Covid-19 has halted international travel, ESG has not let up on helping companies make the necessary connections.

We organised webinars, virtual missions and pitching sessions, promoted flagship events and multilateral innovation collaboration platforms, and continued to assist companies one-to-one.

Germany, the largest economy in the EU, is a focus market for our virtual outreach efforts.

On Oct 21 this year, ESG and the Asia-Pacific Committee of German Business (APA) held the inaugural Germany Singapore Business Forum (GSBF) Connect during the Industrial Transformation Asia-Pacific show, attracting over 2,400 registrants.

We also worked with eight supporting partners to facilitate close to 300 business matches.

ESG and the APA will also be organising the next edition of GSBF Connect during the Singapore Week of Innovation and Technology on Dec 9.

Leverage in-market partnerships

Finding a reliable partner is often the most effective way of entering a new overseas market.

Companies can leverage in-market partnerships to build awareness and tap the strengths of particular markets or regions in the EU to build a stronger value proposition.

For example, the Central and Eastern European (CEE) markets have highly innovative ICT ecosystems, with a well-trained IT workforce and globally-exposed software development companies.

Singapore companies in the ICT and financial technology sectors can consider finding CEE partners to boost product development for their home markets, or as a stepping stone to penetrate the rest of Europe.

The CEE is also home to innovative startups such as Transferwise and Skype, presenting opportunities for Singapore companies and investors to add financial and technology value to their existing portfolios through partnerships and investments.

Within Western Europe, the potential areas for co-innovation are in medical devices, mobility solutions, sustainability and digitalisation of services (healthcare, retail, finance, logistics, trade, and so on).

The pandemic has accelerated the demand for innovative and digital solutions across many countries.

There are various ways - through distributorships, joint trials or product development - for Singapore companies to enter the markets.

ESG has a longstanding presence in Europe, with four overseas centres in Frankfurt, Istanbul, London and Moscow.

We actively facilitate partnerships between Singapore and European enterprises, and run co-innovation programmes with in-market partners to foster R&D partnerships.

An example is the Eureka GlobalStars programme, which attracted 273 participants from 15 countries in the second programme call held recently.

Singapore has also set up Global Innovation Alliance nodes in two EU countries - France and Germany - to connect Singapore startups and SMEs to business and technology communities in these markets.

Q: How can Singapore companies leverage the EUSFTA in their market entry into the EU?

The EUSFTA will provide for liberal and flexible rules of origin (ROOs) for the EU's and Singapore's key exports to each other's markets, including automobiles, chemicals, clothing and textiles, electronics, machinery, pharmaceuticals and petrochemicals.

It is also the first bilateral FTA in which Singapore incorporated enhanced market access for Asian food products made in Singapore, such as har gow (prawn dumplings) and sambal ikan bilis (spicy crispy anchovies).

These Asian food products can enter the EU tariff-free under flexible ROOs, up to a combined quota of 1,250 tonnes annually, if the Singapore food manufacturers are certified to meet the EU's sanitary and phyto-sanitary standards for food imports.

Q: How can Singapore look to the EU as new source markets for products, and what role does Singapore play as a hub for trade in South-east Asia?

Singapore's good transport connectivity to Europe, transparency of processes, and vibrant trade and logistics ecosystems make Singapore the first destination for European producers wanting to penetrate the wider Asian region.

Conversely, Europe is a prime candidate when Singapore needs to consider source diversification options. European companies have proven to be reliable partners in keeping supply chains functioning especially in times of crisis.

An example is food producers from Poland, who recognise that Singapore companies have extensive trade networks within South-east Asia which will help them capture the much larger regional market.

Additionally, entry into Singapore, known for its high standards of food safety, provides good validation of the quality of the products.

Separately, the reduced tariffs under the EUSFTA will benefit imports of alcohol from the EU into Singapore. This has generated interest in Singapore as an alcoholic beverage distribution hub, as we received new enquires from wine and spirits producers from Europe.

Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.