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Focus on Singapore

An interview with Dr Tim Philippi, Executive Director of the Singaporean-German Chamber of Industry and Commerce, on Singapore as a business location, German companies and the common market in Southeast Asia.

© Pressefoto - Tim Philippi

Dr Philippi, the Singaporean-German Chamber of Industry and Commerce celebrated its 10th anniversary in 2014. How big is the German community in Singapore these days?

The number of German companies based in Singapore has steadily grown in recent years, as has the number of German cit­izens resident here. Let’s just take a look at the figures for businesses being set up here. Every year, we’ve seen an influx of between 60 and 100 new companies from Germany. There are now more than 1,400 of them. As for the number of Germans living here, there are probably around 9,000, mostly German company employees and their families but also academics and scientists who are working at the city’s universities and research institutions.

What sort of things are the German companies doing in Singapore? And what’s the future trend?

German companies generally use Singapore as a regional hub or headquarters. In nearly all cases, they are principally responsible for the Southeast Asia region. In future, there will be further integration of the markets in the member states of the Association of Southeast Asian Nations (ASEAN) with the ASEAN Economic Community (AEC), which is set to be launched in 2015. That will further facilitate intra­regional trade. Singapore also has numerous free trade agreements. That’s an advantage for companies wanting to use Singapore as a base for operations across the region. The trend is clear: the Asia-Pacific region will continue to be a major engine for growth in the future, too, and Singapore as a driving force here will mirror this growth – as a business location for German companies and as a regional base serving the market there, but also in terms of manufacturing, research and development (R&D) and services. R&D in particular is becoming increasingly interesting for German companies – for example, when it comes to adapting their products to meet regional customer needs.

What makes Singapore so attractive as a place to do business?

The main factors are its favourable geographical location and good accessibility, both for Germany and Asia. Singapore also has excellent infrastructure. That’s true, for example, of its widely acclaimed airport and its seaport – incidentally, one of the largest worldwide – but also of its healthcare services, schools, universities and public transport system. Another thing companies like about Singapore is the widespread use of English, which makes it easy to operate here. Then there are factors like the stable legal environment, a political climate that offers planning certainty, a highly skilled labour force and the possibility of bringing in specialists from Germany and other countries.

Which Southeast Asian countries are most important for companies based in Singapore?

First of all there’s Indonesia – with more than 240 million people the most populous country in the region. Then there’s Malaysia, a very highly developed country in Southeast Asia and Singapore’s prin­cipal economic partner. But there’s also Thailand and Vietnam. There are, it should be emphasised, sectoral differ­ences between the ASEAN countries. Thailand, for instance, has very large automotive, auto supplier and food industries. In Malaysia, the key sectors include the chemical industry and the electronics and semiconductor industry. In Indonesia, the focus is on mechanical engineering products and anything to do with raw 
materials and energy, as well as consumer goods. But countries with smaller economies are also showing strong growth – take the Philippines, for example, or Myanmar, a country that has recently opened up.

What impact is the free trade agreement between the EU and Singapore having?

The free trade agreement (FTA) is currently in the process of ratification. Singapore will then be the first ASEAN country to have an FTA with the European Union. But others will follow suit: there are plans to conclude free trade agreements with other ASEAN nations – Malaysia and Vietnam, for example. In the period up to 2012, trade between Singapore and the EU and mutual foreign direct investment (FDI) have steadily grown – a trend that is likely to intensify. Singapore is already an important location for many German companies, and the free trade agreement will have a further positive effect here too.

The common market of ASEAN countries is due to be launched in 2015. How do things stand at present? What 
changes will that bring – for German companies too?

The ASEAN Economic Community (AEC) is in the pipeline, with the launch set for late 2015. It will lead to the free movement of goods, services and capital across the ten ASEAN countries, as well as bringing improvements in terms of the mobility of skilled workers. That will create one of the world’s largest markets, with a population of more than 600 million and a GDP of over 2,400 billion US dollars. German exports to ASEAN are already worth around 22 billion euros. By way of comparison, that’s about twice the value of exports to Brazil or India, and also more than to Japan. And ASEAN has huge potential: in the coming years the region’s gross domestic product is expected to grow by an average of 6%. Trade between Germany and ASEAN is also booming: total bilat­eral trade grew to 49 billion euros in 2012. That’s another reason why it’s so import­ant for German companies to take an interest in ASEAN, to think about how to position themselves strategically in this gigantic market in the future.

You’ve been in Singapore for quite a few years now. What’s it like for Germans living there? And what do you personally like most about it?

Around a third of Singapore’s residents are foreigners – a melting pot of different nationalities living in a very small area (Singapore is about the size of Hamburg but with a population of approximately 5.5 million). The widespread use of English makes it easy to settle in and find your bearings – that’s a big advantage. But there’s a German community here, too, of course. One local institution that’s import­ant for the German business community is the German European School Singapore (GESS) – incidentally, one of the largest German Schools Abroad in Asia. A lot of German families send their children to this school or the kindergarten, which means, of course, that the school is also a meeting place for the parents. But there are other ways of connecting with fellow expats: via the Singaporean-German Chamber of Industry and Commerce (SGC), the German Association or the German Embassy. What do I personally like most about living here? The city’s tremendous vitality and, highly recommended, the 
local cuisine. Just try laksa, a traditional Singaporean dish. It’s simply delicious. ▪

Interview: Martin Orth