25 November 2016

IE Singapore, UOB sign MoU on connectivity collaboration

International Enterprise (IE) Singapore, the government agency promoting international trade and partnering Singapore companies in going global, and United Overseas Bank (UOB) have partnered to accelerate trade and internationalisation for Singapore companies through a memorandum of understanding (MoU) that marks IE Singapore’s first strategic partnership with a Singapore bank.

IE Singapore and UOB aim to assist 200 Singapore companies in their overseas expansion over the next three years, especially to Southeast Asia, China, Japan and Europe.  Companies expected to benefit from the IE Singapore-UOB collaboration include those in consumer-related sectors, business services, digital solutions, infrastructure, real estate, tourism, hospitality, logistics and trade.

In line with IE Singapore’s strategy to build and strengthen wholesale trade in Singapore, UOB will provide advisory and solutions on trade financing for Singapore companies expanding overseas. Both parties will also develop innovative initiatives and financial tools to ease the internationalisation process. This includes piloting new fintech solutions to raise cross-border trade efficiency. 

The collaboration will provide Singapore companies with customised trade and financing solutions, deeper access to in-market connections, business partners and professional service providers across Asia, including business tieups with UOB’s global clients. UOB will offer financial solutions such as supply chain financing, cross-border financing, venture debt, cash management and settlement, as well as professional services including public listings, bond issuances and corporate finance advisory.

In particular, its Foreign Direct Investment (FDI) Advisory Unit is strong in cross-border banking, especially in Southeast Asia. The unit has already helped more than 1,700 companies fulfil regional growth ambitions since 2011, and will work with IE Singapore to provide greater links to local government agencies, industry partners and professional service providers. 

Said Chua Taik Him, Deputy CEO, IE Singapore, “This connectivity collaboration helps IE Singapore and UOB to reach out to more Singapore companies, offering them better market insights, business intelligence and a more comprehensive choice of financial solutions. Through strengthening such cross-border business infrastructure, we hope to drive the growth of wholesale trade and overseas expansion of Singapore companies.”

Frederick Chin, MD and Head of Group Wholesale Banking, UOB, said, “At UOB, we channel the same commitment that transformed us into a leading regional bank into helping companies fulfil their growth ambitions both domestically and in overseas markets. We do this by providing our unique combination of local presence and expertise, astute market insights, regional network connectivity and seamless cross-border solutions. Through our collaboration with IE Singapore, we will be able to deepen further our support of Singapore companies as they spread their wings overseas.”

Lee Ark Boon, CEO, IE Singapore, noted that there has been heightened economic uncertainty in 2016. "Weak external demand is affecting Singapore’s trade. Competition has also intensified as regional countries continue to develop their economies. Nevertheless, Asia remains a bright spot and there are vast opportunities for Singapore-based companies to tap into," he said.

"As a small country with an open economy, connectivity is core to Singapore’s prosperity. We started as a trading port and over the decades, we have built up the depth and breadth of our international linkages to become one of the most connected countries in the world2. Today, our excellent connectivity forms the backbone for trade and investments. Connectivity goes beyond the physical flow of goods – combining physical trade and logistics networks with emerging financial and digital innovations. This provides opportunities for our companies to create new business models, which gives us the competitive edge."

Lee used the example of the evolving Singapore wholesale trade sector to illustrate his point. "We will require connectivity in the form of electronic payments, e-marketplaces and other value-added services. 5. Hence, it is crucial that key business services functions, such as finance, logistics and professional services, are fully integrated into the overall ecosystem, leading to more seamless business and trade flows to and through Singapore," he said.

The collaboration taps the rising potential of ASEAN, especially in intra-regional trade. In the past five years, intra-ASEAN trade almost doubled from US$332 billion to US$600 billion in 2015, and total intra-ASEAN trade is expected to hit US$1 trillion in 20201. The region’s growing middle income class, increasing connectivity and expansion of e-commerce will create greater demand for goods and services, which will in turn drive the increase in cross-border and B2B transactions.

Lee noted that the partnership combines complementary strengths to offer better financial and professional services; as well as market access through each other’s overseas network for Singapore companies looking to expand regionally, especially in ASEAN. "ASEAN is a key market for Singapore. A recent study3 by the Ministry of Trade and Industry (MTI) shows that the ASEAN-5 economies, comprising Indonesia, Malaysia, Philippines, Thailand and Vietnam, have overtaken the US as the largest final demand market for Singapore.

"As the ASEAN Economic Community deepen its roots, it will further boost intra-ASEAN investments and trade flows, underpinned by our region’s rising middle class and urbanisation. On the trade front, it is forecast that intra-ASEAN trade will grow to US$1 trillion in 2020. ASEAN as our economic hinterland is no longer rhetoric but reality and opportunity," he said.

Wee Ee Cheong, Deputy Chairman and CEO, UOB, said both organisations have "a shared vision and deep commitment to helping Singapore businesses grow". "The world today is of slower growth yet more volatile and less predictable. Asia is not spared. However, the fundamentals here work in its favour, whether it’s demographics, intra-regional business flows or the rising middle income. As for ASEAN, the economy is valued at more than US$2.5 trillion. Its growth continues to outpace those of the EU and US.

"Connectivity initiatives present further opportunities. We have One Belt One Road, Asean Economic Community, Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia Pacific. These and ongoing digitalisation will draw markets closer," he said, adding that continued engagement, a practical, paced approach and learning from past lessons could help to realise the collective potential of the region.

According to a recent UOB Asian Enterprise Survey, limited growth in domestic markets was one of the top barriers to growth cited by Singapore enterprises. "From our survey, we also know that Singapore companies seek strong local business connections when they trade and expand overseas. With this MoU, UOB and IE Singapore will work together to provide jointly the connectivity that these companies need in their overseas ventures, in particular, in Southeast Asia, China, Japan and Europe," Wee said.

"As partners, we will also explore the use of innovative tools and initiatives, including fintech solutions, to help Singapore companies conduct cross-border trade more effectively," Wee added. "With UOB’s own roots as a small and medium sized enterprise (SME), we have deep insights and full appreciation of what it takes to pioneer a business, to grow it in your home market and then to take it regionally. We also understand the importance of having the right partnerships to help accelerate the process of growth and expansion."

UOB had previously partnered IE Singapore in its Internationalisation Finance Scheme to facilitate overseas expansion.

1 Source: Asian Banking and Finance, 16 October 2016.
2 Singapore ranked first in the McKinsey Global Institute Global Connectedness Index in 2014, and in the top three positions of the DHL Global Connectedness Index from 2007 to 2013.
3 Extracted from Singapore Minister S Iswaran’s speech at the MTI Economic Dialogue on 6 September 2016.  Iswaran is Minister for Trade & Industry (Industry) and Co-Chairman of the Committee on the Future Economy.