Wednesday, 28 November 2012

More Japanese firms keen on S'pore

They see Republic as investment safe haven, springboard to Asean market
By Kwan Weng Kin, The Straits Times, 27 Nov 2012

TOKYO - Japanese companies concerned about rising tensions in the region increasingly see Singapore as a safe place for investing as well as a convenient springboard for tapping the larger Asean market.

As the first step in its overseas expansion plan, egg producer Ise Foods will be building a farm in Singapore in 2014 that will house one million hens.

Part of its output will be sold as "brand-name" eggs at high-end supermarkets.

The farm, which will cost three billion yen (S$45 million), will incorporate the latest sanitation technologies just like those in Japan.

Ise also plans to build farms in Indonesia in 2015 and in Vietnam a year later.

Meanwhile, anti-Japanese protests and attacks on some Japanese businesses in China in September have prompted many Japanese companies to fine-tune their business strategies on the Chinese mainland.

Japanese investments to China reportedly fell 32.4 per cent last month compared with the same period last year, due partly to anti-Japanese sentiments and also to China's economic slowdown.

The protests, resulting from the tussle between Tokyo and Beijing over ownership of the Senkaku/ Diaoyu islands, underline the risks of doing business in China for Japanese companies.

Watami, which runs a chain of izakaya or pubs, had originally wanted to open 40 outlets in China over four years. It has since decided to halve the number and to look to other Asian markets instead, including Singapore.

A seminar held here last week on investing in Singapore drew 100 companies, many of them from the IT, advertising, and food and beverage sectors.

Addressing the participants, a team representing the Singapore Business Federation (SBF) touted the benefits of setting up shop in the Republic.

"When you go to Singapore, it is not just a market of six million people. From there, you can tap 600 million people in the entire South-east Asia," said former SBF chief executive Teng Theng Dar.

He told The Straits Times that Singapore welcomes in particular Japanese companies that have specific technologies or patents to offer.

"As Singapore is looking for a fast track to innovation, we can form joint ventures with such companies to develop markets in other countries," he said.

Japanese companies keen to do business in Asean should also "get in early and have their supply chains ready for 2015", he added.

Tariffs among Asean's six founding members, including Singapore, will come down by 2015.

Many Japanese companies do not need persuading.

Among those planning to set up a base in Singapore in the near future are one of Japan's biggest Internet service providers, a major record label and a medium-sized pharmaceutical firm.

The rising demand for rental office space reflects the rush by Japanese firms to go to South-east Asia.

Japanese rental office firm Crosscoop started operating in Singapore in July last year, targeting mainly Japanese companies. It has since opened rental offices as well in Jakarta and New Delhi.

"We also expect to open for business in Ho Chi Minh City in January and in Manila in March," said Singapore-based Crosscoop director Yasuji Seki.

Interest in South-east Asia is undoubtedly high among Japanese businesses.

A survey by the chamber of commerce in Osaka, Japan's western commercial hub, found that more than 40 per cent of its members plan to go overseas and of this group, 55 per cent are eyeing South-east Asian markets.

"Politically stable and Japan- friendly, South-east Asia (SEA) will be increasingly attractive as strategic business bases for Japanese firms," said management consultant Shotaro Kobayashi of Funai Consulting.

"In future, SEA will also serve Japanese firms as a hub for India, the Middle East, Central Asia and even China," he added.

According to official statistics, there are just over 1,000 Japanese companies in Singapore.

The total stock of Japanese investments in Singapore in 2010, the latest year figures are available, stands at $54 billion.

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