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Singapore Companies Seek Overseas Growth as Economy Slows

Singapore Is Asia’s Most Competitive City
Visitors look at the central business district skyline from the SkyPark atop Marina Bay Sands in Singapore. Photographer: Sam Kang Li/Bloomberg

Singapore 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 today. Singapore Airlines Ltd. said it’s offering pilots unpaid leave to cut costs as profit fell for five straight quarters, while lender DBS Group Holdings Ltd. plans to boost its China workforce after earnings there doubled in 2011 and it seeks to reduce reliance on its home market.

Singapore is tightening foreigner inflows 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 Ltd., Southeast Asia’s biggest phone company, said this month it agreed to buy Redwood, California-based Amobee Inc. for $321 million in cash to expand in mobile advertising. SingTel, whose largest shareholder is Temasek Holdings Pte, set up a S$200 million ($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 Ltd. said yesterday it will 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 today. While the unemployment rate averaged a 14-year low of 2 percent last year, productivity and job vacancies fell last quarter, it said.

Singapore retail sales rose 1.7 percent in January from a year earlier, the statistics department said today. Elsewhere in Asia, the Reserve Bank of India kept benchmark interest rates unchanged for a third consecutive meeting after inflation accelerated, while Sri Lanka may say growth slowed last quarter.

Labor Costs

The European Union statistics office will release fourth-quarter employment data today, and may say labor costs rose 2.3 percent in the three months through December, a survey showed. Irish inflation probably slowed in February, economists predict before a government report today.

In the U.S., 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.

Manufacturing Jobs

Singapore’s manufacturing industry lost 1,400 jobs last quarter, the government said today. 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 Ltd., a brokerage backed by Carlyle Group LP, is shutting its securities operations in Singapore and cutting about 11 positions, Bloomberg News reported 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 Plc, the world’s second-largest aircraft-engine maker, opened a manufacturing and assembly factory in Singapore last month. The S$700 million 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, the company said Feb. 13.

“Lower value-added activities will relocate overseas and only capital-intensive investments ones will remain here,” Seah said.

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