UOB to set up FDI advisory units prompted by rising intra-regional trade

JOHOR BARU: Rising intra-regional trade and the growing interest among Singapore's businesses to expand into Iskandar Malaysia have prompted Singapore-based banking group UOB to set up five foreign direct investment (FDI) advisory units in five countries.

United Overseas Bank Ltd managing director and group head of commercial banking Eric Tham said other than Malaysia, these advisory units would be set up in Thailand, Indonesia, China and India. The first one was set up in Singapore in 2010 and Malaysia's FDI unit was unveiled last week. Thailand's unit will be launched in this month.

Tham was speaking to reporters after addressing representatives from about 200 of Singapore's mid-sized companies at a seminar organised by the banking group called Seizing Opportunities across the Causeway in Johor Baru last Thursday.

“South-East Asia had record FDIs in 2011, exceeding US$100bil, of which about US$60bil went into Singapore,” said Tham.

The FDI advisory units, equipped to provide a portfolio of services ranging from banking and finance, taxation, legal and property-related matters, will ease the way for businesses as they expand regionally. Tham expected the Malaysian FDI advisory unit to help double its corporate loans growth for UOB Malaysia in the next three years.

The move to introduce FDI advisory units in the UOB group is perfectly timed, said Tham, as the Singapore 2013 budget announced earlier in the week was calling for companies to expand outside of Singapore.

Coupled with the incentives to improve the business and investment climate in Johor, “it seems perfect weather” for Singapore businesses to expand abroad, he said.

Last week, the Singapore government introduced a land productivity grant of S$60mil to support companies which intensify land use in the city state. Help will also be given to those who choose to relocate some operations offshore, including to the immediate region, while retaining core functions on the island.

Tham said 67% of its customers in Singapore had foreign operations outside the city state.

“Malaysia currently accounts for 10% of total FDI inflows from South-East Asia from the manufacturing, services and mining sectors,” he said. This was validated by a survey conducted by the Singapore Management University. In that same survey, Malaysia was ranked the top investment destination by companies in Asean.

“As our largest trading partner, Malaysia remains an attractive expansion destination because of its pro-business environment, proximity and similar culture and language,” he said.

Singapore Business Federation director (Asean and South Asia global business division) Alan Tan Wing Wton said it made a lot of sense for Singapore businesses to operate in Iskandar Malaysia because of the proximity.

He said it was a lot cheaper in terms of land and construction cost although labour might be an issue. The Federation represents 19,400 companies in Singapore, with 70% of them SMEs and 30% multi-national companies.

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