About snail slime, traffic and the most expensive place in the world
Following my move to Singapore in 2007, as an expat for ING, I attended a week-long course at INSEAD called 'Building the business in Asia'. The first three (!) hours of that week we spent debating the definition of the region we would be working in: Asia.
For ING it spans India to Japan, and from Mongolia all the way down to Australia, which is a rather large area. A flight between Singapore and Seoul easily takes 6 1/2 hours, the same it takes to fly from Amsterdam to New York. All these countries have many differences in culture, language and cuisine. This diversity is something I noticed again this week when I travelled from Amsterdam to Bangkok, then on to Jakarta, before I eventually ended up in Singapore – which is according to the Economist Intelligence Unit the most expensive city in the world.
In Bangkok my colleagues and I met with Thai and Dutch companies as opportunities exist with the first category to work even more oversees. With the opening up of Myanmar and the other Mekong countries, Thai corporates are diversifying their assets abroad. The frail situation of the Thai King, discussion around his succession and the military rule also adds to a certain anxiety about how the local market will react. For international companies, Thailand is still a large growth market, but the regulatory and tax environment for foreign consumer goods does not make it easy on foreign companies. At the same time, Thailand’s proximity to and ties with nearby countries that are now opening up for business, like Myanmar, makes it a good hub for foreign investors looking for regional opportunities.
Jeroen Plag, head of Client Coverage Americas, Asia & UK at ING Commercial Banking, regularly shares his opinion on market developments and perspectives, based on extensive travelling across the global ING network.
Beyond commuter challenges, Jakarta is slowly sinking: some 2-4 centimeters every year, with 40% of the city already below sea level. In 2007 a monsoon storm, combined with a high tide, flooded half of the city. Now plans have been developed to build a big dam, which will mean massive land reclamation, called the Great Garuda. It’s clearly a great opportunity for (Dutch) infrastructure, building and dredging companies as the government is investing hundreds of billions of USD in improved infrastructure projects.
In Jakarta I met with senior Central Bank and Ministry for Economic Affairs officials. They spoke of the can-do spirit of the newly appointed Jokowi administration, which was also echoed by the Indonesian corporates we visited. Investments are happening and changes, such as the abolishment of the very costly petrol tax, and healthcare plans for the poor, have been rolled out. At the same time stricter local regulations requiring foreign expats to learn Bahasa, as well as the recently announced ban on alcohol sales, do present hurdles. However, with 270 million inhabitants, Indonesia is clearly at the forefront of Southeast Asian economic development.
Landing in Singapore, voted the most expensive city in the world for the second year in a row, getting to the hotel is a breeze.
Landing in Singapore, voted the most expensive city in the world for the second year in a row, getting to the hotel is a breeze. Traffic has picked up considerably but the city-state is very organized in its execution, including managing the traffic flow, and this doesn’t come for free. Cars are more expensive than ever and to help control CO2 emissions and older cars have been banned. One colleague told me he requested a permit to keep his 10-year-old Hyundai on the road, which costs SGD 80k (EUR 55k) but the scrapyard value may even not be a quarter of that! Buying a new, similar model for SGD 140k (EUR 96k) is not a cheap option either. So maybe the metro, which is being expanded, is the best option for getting to work.
Although these countries are clearly Southeast Asian, all three have their specific economic and government structures and developments, as well as internal and external challenges. Singapore has clearly claimed the position of regional hub, attracting more and more wealthy residents from across the region and around the globe. Indonesia is looking up and forward and Thailand up and out. And a snail-pace execution obviously won’t do!
Follow Jeroen on Twitter: @JeroenPlag