By Lee Kah WhyeSingapore, March 28 (ANI): Last week, Singapore announced major relaxation of COVID-19 measures which will help it take a giant step towards exiting all pandemic-era restrictions and truly living with the virus as an endemic disease.
From April, besides lifting quotas for foreign visitors which puts an end to the VTL (vaccinated travel lane) scheme, wearing masks outdoors will no longer be required, and up to 75 per cent of workers can return to their offices. Pre-departure COVID testing for travellers entering the city-state will still be required but that too is expected to be scrapped when this is reviewed in about three to four weeks' time.
More significantly for businesses, the land border between Singapore and Malaysia is expected to be reopened without limitation for vaccinated visitors. Prior to Pre-COVID restrictions, about 350,000 Malaysians crossed the border every day to come to Singapore to work in jobs Singaporeans shun like cleaners, builders, food servers, and in positions in the transportation and healthcare sectors.
These workers provide companies with a low-cost option to fill particular jobs which helped lower costs for businesses.
A survey published last week, titled "Borderless Business: India-ASEAN Corridor, a strategic point-of-view" conducted by consulting firm PwC and commissioned by Standard Chartered (SC), highlighted the importance of Singapore as a hub for Indian firms engaged in cross-border business activities across the India-ASEAN corridor. Senior executives at 41 businesses based in India were involved in the study which took place in September 2021.
84 per cent of these companies said they were keen to tap Singapore for expansion opportunities and agreed that the city-state is an ideal place to set up their regional sales and marketing headquarters.
These Indian firms will benefit from Singapore's rapid return to business as usual. That Singapore is a major hub for Indian companies looking to expand into ASEAN should not be a surprise. Businesses are attracted by its institutional stability, robust infrastructure and strategic location in Southeast Asia.
As of 2020, more than 8,000 Indian companies were registered in the country. The SC survey further revealed that a vast majority of Indian companies targeting the region, plan to establish their ASEAN headquarters in Singapore. A notable 20 per cent of these Indian businesses are also looking to create holding companies or investment vehicles in Singapore, being attracted to its favourable tax, investment and legal climate. Singapore hosts centralised treasury centres for many international companies, to help monitor cash flows and manage currency risks across their ASEAN operations.
Besides Singapore's robust financial markets, the country's advanced technology ecosystem and innovation-driven policies are seeing a growing number of Indian startups make Singapore their gateway into the larger ASEAN market.
At a broader level, the survey found that Indian companies focusing on ASEAN are highly optimistic about business growth in the region and consider Indonesia, Vietnam, Malaysia and Singapore as the markets that offer the best expansion opportunities. 93 per cent of these firms expect revenue growth in the next 12 months.
Ninety per cent of these firms say that access to the large and growing ASEAN consumer market is the most important driver for expansion into the region. The other two important factors are the availability of an abundant and skilled workforce (51 per cent) and access to a global market enabled by a network of Free Trade Agreements (44 per cent). With the Regional Comprehensive Economic Partnership (RCEP) expected to attract more investments into the 10-nation ASEAN bloc, some 63 per cent of respondents indicated that their companies would increase investments into ASEAN over the next three to five years.
Despite the opportunities, the survey also showed Indian companies recognise that a wide range of risks exist within the region. The top three identified risks are the COVID-19 pandemic or other health crises (85 per cent), the slow revival of the economy and drop in consumer spending (73 per cent), as well as geopolitical uncertainty and trade conflicts (54 per cent).
The top risk mitigation strategies the survey respondents say their companies will consider focusing on are entering new partnerships and joint ventures to increase market presence (73 per cent), investing in leadership and talent development (59 per cent) and driving sustainability and ESG (Environment, Social and Governance) initiatives (41 per cent).
Freddy Ong, Head, Client Coverage, Corporate, Commercial and Institutional Banking, Singapore, Standard Chartered, said: "ASEAN is increasingly important trade and investment destination for India. In the first three quarters in 2021, the worth of merchandise exports from India into ASEAN was USD28 billion (a 42 per cent increase). The region has also been attracting more and more direct investments from India, with a two-fold increase since 2016, to reach USD2.1 billion in 2020."What has been driving economic activity growth between India and ASEAN over the past two decades beside regional proximity and cultural relations are growing government level collaboration which has resulted in several trade and investment agreements with ASEAN members. These create more open markets for Indian goods and services. Recent agreements such as the ASEAN-India Plan of Action 2021-25 are further expanding cooperation in areas such as the digital economy and renewable energy, while also strengthening connectivity and financial integration.
The study identified the following growth sectors which firms should consider focusing on - IT and new economy businesses, pharmaceuticals, automotive in particular electric vehicles, renewable energy and trading. ASEAN features amongst the fastest growing digital economies worldwide, with the pandemic triggering a stronger wave of digital adoption. As leading providers of Information Technology (IT) solutions globally, Indian businesses are well-positioned to tap into these trends.
The survey report added, "Looking ahead, ASEAN seems well-poised to play an important role in enabling India's future growth ambitions. In particular, the region's rising middle class, an expanding industrial sector and growing trade connections with global markets offer attractive propositions for Indian companies seeking growth beyond their domestic shores." (ANI)