Singaporean Businesses Make Overseas Push as Prospects at Home Dim
Singaporean companies are accelerating their push to expand overseas as tighter curbs on housing and reduced dependence on foreign workers lower growth prospects for the economy.
Hiring sentiments have softened amid an uncertain economic outlook and layoffs rose last quarter, the city-state’s government said on Thursday.
Singapore Airlines said it was offering pilots unpaid leave to cut costs as profit fell for five straight quarters, while lender DBS Group Holdings said it planned to boost its China work force after earnings there doubled in 2011 and it seeks to reduce reliance on its home market.
Singapore is tightening inflows of foreigners to address public discontent, and Prime Minister Lee Hsien Loong has said such limits will mean forgoing business opportunities and accepting slower growth.
While it was ranked Asia’s most competitive city in efficiency and attracting businesses by the Economist Intelligence Unit, increased curbs on property purchases may hurt earnings for lenders and real-estate developers.
“Singapore is becoming more and more expensive and business and labor costs are rising,” said Irvin Seah, an economist at DBS Bank in Singapore. “While Singapore’s strategy is to internationalize its companies, there are increasingly more push factors and incentives for companies to expand overseas and broaden their markets.”
Singapore Telecommunications, Southeast Asia’s biggest phone company, said this month that it had agreed to buy Redwood, California-based Amobee for $321 million to expand in mobile advertising. SingTel, whose largest shareholder is Temasek Holdings, set up a 200 million Singapore dollar ($159 million) fund in 2010 to invest in new ventures to transform itself from a traditional home and wireless phone supplier to a multimedia and information-technology services provider.
Singapore Exchange said on Wednesday that it would create derivative trading hubs in London and Chicago, and offer MSCI Indonesia futures as it steps up efforts to become the bourse of choice for Asian trading.
Employers on the island increased payrolls by 37,600 in the three months through December, the Ministry of Manpower said on Thursday. While the unemployment rate averaged a 14-year low of 2 percent last year, productivity and job vacancies fell last quarter, it said.
Elsewhere in Asia, the Reserve Bank of India is forecast to keep benchmark interest rates unchanged while Sri Lanka may say growth slowed last quarter.
And in Europe, the European Union said on Thursday that employment decreased in the fourth quarter as declines in hiring by companies in Spain and Portugal offset gains in Germany.
In the United States, the Federal Reserve Bank of New York may say its general economic index fell to 17.5 this month from 19.5 in February, according to economists surveyed by Bloomberg.
Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. The Philadelphia Fed may say manufacturing in the region expanded in March at the fastest pace in 11 months.
Singapore’s manufacturing industry lost 1,400 jobs last quarter, the government said on Thursday. Sales of electronics have slumped as global demand eases, while pharmaceutical and chemical exports have supported the industry’s growth. The government imposed additional taxes on purchases of private residential property in December.
India Infoline, a brokerage backed by Carlyle Group, is shutting its securities operations in Singapore and cutting about 11 positions, Bloomberg News reported on March 9, citing two people with direct knowledge of the matter.
Singapore has diversified its growth drivers by luring pharmaceutical companies to build plants and ending a four-decade ban on casinos. The island is ranked by the World Bank as the easiest place to do business.
Rolls-Royce Holdings, the world’s second-largest aircraft-engine maker, opened a manufacturing and assembly factory in Singapore last month.
The 700 million Singapore dollar plant created 500 new jobs and the company expects its contribution to the economy to climb to 0.5 percent of Singapore’s gross domestic product by 2015 from 0.3 percent now, it said on Feb. 13.
“Lower value-added activities will relocate overseas and only capital-intensive investments ones will remain here,” said Seah, the DBS Bank economist.