Singapore companies are looking to expand overseas in India and the Middle East, which aren't already well known

As global firms seek to diversify their international trade and investment exposure, Singapore enterprises intending to expand abroad are increasingly looking at emerging opportunities beyond Asean and China.

In response, the Singapore Business Federation (SBF) and HSBC have partnered to help local businesses expand internationally in vital trade corridors, particularly in underserved areas such as India and the Middle East.

The collaboration between SBF and HSBC comes at a crucial time when global economic dynamics are shifting. Singapore, known for its strategic location and business-friendly environment, is positioning itself as a gateway for companies looking to tap into these emerging markets. This partnership aims to provide Singaporean businesses with the necessary resources, expertise, and financial support to navigate the complexities of expanding into new territories.

The idea is that enterprises in Singapore should capitalize on the country's long history of strong commercial and diplomatic ties with India and Middle Eastern countries before the first mover advantage dries up.

Aside from the shifting supply chains and investment flows caused by geopolitical tensions and superpower competition in commerce and technology, India and the Middle East form a nearly continuous region of some of the world's fastest developing economies.

The potential for growth in these regions is immense, with both India and the Middle East experiencing rapid urbanization and digital transformation. Singapore's reputation for innovation and technological advancement puts its businesses in a unique position to contribute to and benefit from these developments. From smart city solutions to fintech innovations, Singaporean companies have the expertise that aligns well with the ambitious development goals of these emerging economies.

India and the Middle East, which together account for almost a quarter of the world's population, are also embarking on an unprecedented push to increase investment in urban development, transportation, utilities, renewable energy, tourism, real estate, manufacturing, and logistics.

Some of Singapore's largest corporations have already moved in. However, smaller businesses, even if they have an appealing product and a solid business plan, require assistance.

This was one of the key arguments raised during an interview with SBF CEO Kok Ping Soon and HSBC Singapore CEO Wong Kee Joo. Saudi Arabia, for example, intends to spend up to US$175 billion (S$228 billion) every year between 2025 and 2028 on greenfield industrial plants and gigaprojects like Neom, a megacity being created in a bay in the country.

In real estate, it intends to create 660,000 new houses, 289,000 hotel rooms, 6 million square meters of office space, and 5.3 million square meters of retail space. "But Saudi Arabia is not exactly the easiest market for any company," said Mr Kok, who also mentioned that India and most Middle Eastern nations are not as open as Singapore.

Saudi Arabia, under Crown Prince Mohammed bin Salman's Vision 2030, which aims to diversify the economy away from oil, has taken numerous steps to establish a favorable business environment, including streamlining and simplifying administrative processes. However, it might be tough to understand the complexity of some of the rules.

For example, since 2021, when the Saudi government announced that it will stop cooperating with multinational corporations without a regional headquarters in the kingdom by 2024, approximately 400 global companies have relocated their regional headquarters there.

This shift in Saudi Arabia's business landscape presents both challenges and opportunities for Singaporean companies. While the requirement for regional headquarters may seem daunting, it also signals the country's commitment to attracting long-term, substantial investments. For Singaporean businesses, this could mean deeper market penetration and stronger local partnerships, potentially leading to more significant returns on investment in the long run.

Mr Kok led a delegation of 32 high-level business representatives from 27 Singapore companies in the energy and sustainability, built environment, marine and offshore, healthcare, and technology sectors to Saudi Arabia and the UAE in October 2023, coinciding with then-Prime Minister Lee Hsien Loong's official visit.

During the visit, SBF signed separate memoranda of understanding (MOUs) with the Ministry of Investment Saudi Arabia and the Federation of Saudi Chambers to strengthen bilateral ties and boost economic cooperation, trade, and investment.

In accordance with the MOUs, the establishment of a joint Saudi-Singapore Business Council was announced for September 2023. Mr Kok stated that these steps will facilitate investment by Singapore enterprises, particularly smaller ones.

"Many large corporations would be able to enter the majority of these markets. We try to help the next tier of companies," he explained.

According to Mr Kok, SBF wants to lead a team of Singapore companies to India from September 8 to 14, with an emphasis on the semiconductor sector. While HSBC is one of the oldest Western banks in the Middle East, its roots in India go back to 1853, when the Mercantile Bank of India was founded in Mumbai.

Today, with a GDP of US$3.9 trillion, India is the world's fifth-largest and fastest-growing major economy, and it is regarded as the next Asian industrial giant. For HSBC, the country is one of its most profitable markets.

Mr Wong believes that, in addition to opportunities in manufacturing, logistics, real estate, and other sectors, Singapore's fintechs can have an impact in India and the Middle East.

"In India, we are witnessing a genuine revolution in terms of the digital economy."

"There is a digital boom which offers Singapore businesses, especially fintechs and start-ups, opportunities in areas such as payments, lending, investment and reinsurance," said Mr. Lee.

According to Mr Wong, other industries in India where Singapore companies might invest include sophisticated manufacturing, semiconductors, aviation, and maritime.

He stated that as a bank, HSBC can assist Singapore enterprises, particularly start-ups, with any financial constraints and transactions within and outside of the country. But, more crucially, HSBC can provide them with local experience on how to interact with the government and partners in the new market.

The role of HSBC in facilitating this expansion goes beyond mere financial support. The bank's extensive network and deep understanding of local markets provide invaluable insights for Singaporean businesses. This knowledge-sharing can help companies navigate cultural nuances, regulatory landscapes, and market-specific consumer behaviors, significantly reducing the learning curve and potential pitfalls associated with entering new markets.

He used the example of Singapore-based tech start-up Crayon Data, which has a centre of excellence in India from which its data, technology, and engineering teams work.

HSBC credit support has not only helped Crayon manage its working capital requirements, but it has also accelerated product development for new artificial intelligence use cases and solutions.

Crayon has introduced CxO Concierge, a new solution that provides real-time business insights to C-level executives and company decision-makers, thanks to investment from HSBC.

The bank also provided Crayon with access to its wide network of critical senior contacts and decision-makers in India, assisting the company in securing new contracts.

In a phone interview from Riyadh, Saudi Arabia, Ms Bell Beh, co-founder and CEO of internet start-up BuzzAR, said the firm saw backing from HSBC's New Economy Fund as critical to its growth in the kingdom.

"HSBC provided BuzzAR with invaluable insights and assistance in setting up early operations," she told me.

BuzzAR creates AI-powered small apps for governments and businesses to promote tourism, and it has a multimillion-dollar deal with the Saudi Tourism Authority. The company created equivalent items for the Singapore Tourism Board.

The company, which aims to expand throughout the Middle East and North Africa, seeks to receive additional funding from HSBC.

The success stories of companies like Crayon Data and BuzzAR serve as inspiring examples for other Singaporean businesses considering expansion into India and the Middle East. These case studies demonstrate that with the right support and strategic partnerships, even smaller companies and startups can successfully navigate these complex markets and achieve significant growth. As more Singaporean businesses venture into these regions, they not only stand to benefit financially but also contribute to strengthening Singapore's position as a global business hub and fostering deeper economic ties with these emerging powerhouses.