HSBC's customised trade finance for S'pore firms
Bank may soon offer option for S'pore-India trade
By MALMINDERJIT SINGH
(SINGAPORE) Singapore companies looking to do business in India may soon look towards customised trade financing options available there, according to Puneet Chaddha, Hongkong and Shanghai Banking Corporation (HSBC)'s managing director and head of commercial banking, India.
Speaking to The Business Times, he explained that while HSBC's standard products are good to a point, custom-made options are necessary and thus the bank is putting together the proposition of developing country-specific financing products.
Quoting examples of the India-Bangladesh and the India-UAE customised trade financing packages currently available in India, Mr Chaddha added that we are likely to see the same appearing for India-Singapore trade.
Such a development is likely to improve documentation and processes standardisation between banks in Singapore and India. Mr Chaddha said this would allow Singapore companies doing business in India to gain better access to financing than before and they would save through lower financial costs and turnaround time.
The global economic recession has altered the trend of financing choices for businesses in India. According to Mr Chaddha, the involvement of banks was kept low in the pre-crisis environment as buyers and sellers trusted each other more with credit options. However, as commercial trust becomes more fragile with the onslaught of the recession, more companies have turned to banks and their instruments, such as letters of credit, as credit enhancers.
Currently, Mr Chaddha explained, both small and medium-sized enterprises (SMEs) and large multinational corporations (MNCs) can draw from a host of financing structures and trade products that the banks in India provide. He pointed out that MNCs may also raise financing domestically or off-shore, depending on which is the cheaper market to borrow from.
Singapore is India's 14th largest import market and fourth largest export destination, as well as being the second largest provider of foreign direct investment into India. While Singapore's exports to India have largely been concentrated in mineral oils, electrical and medical equipment and organic chemicals, recent announcements by the Indian government to liberalise certain sectors of the economy, particularly financial services, higher education and defence, could signal more opportunities for businesses in Singapore.
'I see a greater sense of comfort among Singapore companies in doing business in India now,' Mr Chaddha said. 'As a result of the recent announcements by the Indian Finance Minister (on offering more banking licences), we will see more Singapore companies setting up operations in India, and particularly in the financial services industry,' he added.
HSBC, according to Mr Chaddha, will be following this segment of leading international business very closely as it looks to focus on facilitating cross-border trade. As such, he said the bank is clear that it will look towards penetrating the market that the India-Singapore trade flows creates.
At the same time, he explains that HSBC will create a proposition that it would like to bring to its customers in this segment, so as to highlight the benefits they may enjoy in doing business with the bank. This, he says, represents a more scientific approach to bilateral trade that HSBC is looking to adopt as opposed to simply targeting a certain percentage share of the market and he is confident that this will be a successful strategy.
Mr Chaddha was in Singapore to speak at a session of the International Enterprise Singapore's advisory seminar series on 'Doing Business in India' yesterday.
Saturday, April 3, 2010
Expect a Bold Budget
Expect a Bold Budget
By Malminderjit Singh
In the run up to the Budget, to be unveiled by Finance Minister Tharman Shanmugaratnam this afternoon, the rumour mills have been working overtime on what might be in store. While analysts have expressed mixed views on the likely contents of the Budget, many would agree that expectations in this year of economic recovery are higher than usual.
There are signs to indicate that Budget 2010 will be bold, and will target some broad objectives, as well as some very specific ones. But the economic backdrop to the Budget, while better than last year, is by no means rosy. Although the government has raised its growth forecast to 4.5-6.5 per cent for this year, in reality there are still obstacles to steering the economy to a full recovery. As long as US unemployment figures remain grim and the debt crises afflicting Europe, as well as Dubai, continues to fester, any talk of full recovery is premature.
Clouding the picture even more are the growing asset bubbles in parts of Asia, coupled with high inflation levels in China and India - which could lead to policy tightening in this region and add to the slack in global demand. Given such uncertainties, yet another bold Budget may be necessary to help stimulate the domestic economy.
Moreover, with the General Elections possibly on the horizon later this year, the government may be unwilling to risk any decline in economic growth. This is another reason for it to lean towards an expansionary budget to boost job creation and output. We already have a foretaste of what is to come in the recommendations of the Economic Strategies Committee on Feb 1. It could be argued that the ESC recommendations did not produce as much excitement as expected. After all, the push for productivity and enterprise development, which the committee emphasised, has reappeared many a time over the decades and then fallen off the radar screen. However, the ESC's role was not to generate hype or excitement, but to come up with ways to achieve more sustainable and inclusive growth.
The excitement could be delivered through other means, including the Budget. If the ESC's framework was skeletal, then the Budget will look to add flesh and muscle. It could make the recommendations more concrete and help improve their mass acceptance. An expansionary Budget would be most conducive to measures aimed at restructuring the economy.
Expect Budget 2010 to also address social issues, albeit subtly. This is as good a time as any for the government to use the fiscal tools at its disposal to tackle rising socio-economic concerns. For instance, by incentivising companies to focus on worker productivity, the government would be able to begin the process of reducing Singapore's dependence on low-cost labour from overseas. It is no secret that the influx of foreign labour has been on the minds of many Singaporeans, and this is likely to be addressed in the Budget. There have also been calls for a minimum wage to help tackle the issues of depressed wages and rising income inequality.
If the government does introduce a minimum wage, or a derivative in some part, then it could help improve the standards of living of a significant proportion of Singaporeans. Thus, while previous Budgets have been geared mainly towards economic concerns, do not be surprised if the measures in Budget 2010 are also focused on social policies.
Of course, we should not expect this year's budget to dig as deep into the coffers as did last year's $20.5 billion Resilience Package. After all, the Resilience Package was an urgent solution to help the economy avert the worst effects of the recession - which it did successfully. This time around, the Budget is likely to be less extraordinarily generous. But it could contain measures that have a profound long term impact in terms of guiding the direction of Singapore's future economic development
By Malminderjit Singh
In the run up to the Budget, to be unveiled by Finance Minister Tharman Shanmugaratnam this afternoon, the rumour mills have been working overtime on what might be in store. While analysts have expressed mixed views on the likely contents of the Budget, many would agree that expectations in this year of economic recovery are higher than usual.
There are signs to indicate that Budget 2010 will be bold, and will target some broad objectives, as well as some very specific ones. But the economic backdrop to the Budget, while better than last year, is by no means rosy. Although the government has raised its growth forecast to 4.5-6.5 per cent for this year, in reality there are still obstacles to steering the economy to a full recovery. As long as US unemployment figures remain grim and the debt crises afflicting Europe, as well as Dubai, continues to fester, any talk of full recovery is premature.
Clouding the picture even more are the growing asset bubbles in parts of Asia, coupled with high inflation levels in China and India - which could lead to policy tightening in this region and add to the slack in global demand. Given such uncertainties, yet another bold Budget may be necessary to help stimulate the domestic economy.
Moreover, with the General Elections possibly on the horizon later this year, the government may be unwilling to risk any decline in economic growth. This is another reason for it to lean towards an expansionary budget to boost job creation and output. We already have a foretaste of what is to come in the recommendations of the Economic Strategies Committee on Feb 1. It could be argued that the ESC recommendations did not produce as much excitement as expected. After all, the push for productivity and enterprise development, which the committee emphasised, has reappeared many a time over the decades and then fallen off the radar screen. However, the ESC's role was not to generate hype or excitement, but to come up with ways to achieve more sustainable and inclusive growth.
The excitement could be delivered through other means, including the Budget. If the ESC's framework was skeletal, then the Budget will look to add flesh and muscle. It could make the recommendations more concrete and help improve their mass acceptance. An expansionary Budget would be most conducive to measures aimed at restructuring the economy.
Expect Budget 2010 to also address social issues, albeit subtly. This is as good a time as any for the government to use the fiscal tools at its disposal to tackle rising socio-economic concerns. For instance, by incentivising companies to focus on worker productivity, the government would be able to begin the process of reducing Singapore's dependence on low-cost labour from overseas. It is no secret that the influx of foreign labour has been on the minds of many Singaporeans, and this is likely to be addressed in the Budget. There have also been calls for a minimum wage to help tackle the issues of depressed wages and rising income inequality.
If the government does introduce a minimum wage, or a derivative in some part, then it could help improve the standards of living of a significant proportion of Singaporeans. Thus, while previous Budgets have been geared mainly towards economic concerns, do not be surprised if the measures in Budget 2010 are also focused on social policies.
Of course, we should not expect this year's budget to dig as deep into the coffers as did last year's $20.5 billion Resilience Package. After all, the Resilience Package was an urgent solution to help the economy avert the worst effects of the recession - which it did successfully. This time around, the Budget is likely to be less extraordinarily generous. But it could contain measures that have a profound long term impact in terms of guiding the direction of Singapore's future economic development
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