Posts tagged ‘q2’

Spire E-Newsletter Summer Issue 2018

Spire E-Newsletter Summer Issue 2018

Spire’s 4-point AADC e-commerce strategy addresses SMB e-commerce challenges

1 May 2018

Spire was honoured to participate at the GATES Indonesia ICT Reseller Channel Summit 2018. The Summit was held on 1-3 May, 2018 in Bali. Jeffrey Bahar, Deputy Chief Executive Officer of the Spire Research and Consulting group and Indah Muliana, Senior Manager, shared insights on the Information and Communications Technology (ICT) industry in Indonesia, focusing on market trends and challenges.

Bahar and Muliana discussed the growth of the ICT (Information and Communications Technology) market, its rapid expansion and the challenges faced by e-commerce businesses in Indonesia.

Due to the rise in internet penetration with more online transactions, Indonesia’s ICT spending is expected to reach USD28.4 billion by 2020 whereas end-user device spending is set to increase 18% by 2020.

As Indonesia’s internet user population reaches 143.26 million in 2017, 90% are using smartphones and close to 65% people prefer the Cash on Delivery (COD) option when buying products online.

However, challenges remain for small and medium-sized businesses (SMB) struggling to capture the online market through appropriate channel partners.

Bahar and Muliana focused on a 4-point e-commerce strategy known as AADC (Acquisition, Affiliation, Diversification and Collaboration) to address issues such as improving workforce productivity, lowering operational costs, increasing business growth and managing uncertainty.

Bahar and Muliana discussed multiservice bundling, out of the box solutions and loyalty programs for customers. One example that was discussed was drones developed by SNC Technology to create fleet monitoring and capturing solutions to target forestry and plantations.

Jeffrey Bahar and Indah Muliana’s presentation deck on “GATES Indonesia ICT Reseller Channel Summit 2018” can be found here.

Spire hosts first Client Entertainment Night of the year

27 April 2018

Spire Singapore hosted its first Client Entertainment Night of the year. Clients, business associates and partners joined the Spire team for a dinner reception followed by the movie screening of “Marvel’s Avengers: Infinity War” – the much awaited latest instalment in the Marvel Cinematic Universe franchise.

The movie’s main plot revolves around how the Avengers and their allies must come together to save the world by bringing down the evil Thanos, who is on a mad quest to collect all the infinity stones so as to bring mass destruction to the universe.

The highly anticipated mega-blockbuster, delicious food and even better company made for a delightful evening enjoyed by all.

Spire shares insights on the growth of retail industry across Asia

21 April 2018

Spire Research and Consulting group’s Deputy Chief Executive Officer Jeffrey Bahar was honored to be a guest speaker at the International Franchise Conference 2018. The conference was held on 21 April 2018 in Kuala Lumpur, organized by the Malaysian Franchise Association.

Jeffrey Bahar shared insights on the growth of the regional retail industry, focusing on key trends and the attractiveness of various emerging markets across Asia.

With global retail sales set to rise from USD25 trillion in 2018 to USD28 trillion in 2020, the Asia Pacific is expected to record USD10 trillion in retail sales by the end of 2018.

Bahar highlighted that Asian players were also among the top 250 global retailers in 2016, with China’s e-commerce player JD.com and Japan’s retailer Seven & I Holdings at the 28th and 20th rankings respectively.

With technology development, urbanization and the rise in working women, customers are demanding more innovative services, and retailers are responding. For example, Starbucks’ Reward App allows customers to redeem points to promote brand loyalty.

Jeffrey shared some interesting facts about the regional retail landscape. For example, the average Filipino dines out 42 times in a month (2015 figures), while 92% of Vietnamese shoppers still shop for groceries in-store, with beverages accounting for 40% of purchases.

Bahar’s presentation deck on “The new frontier: where to expand 2018-2020 and what’s happening around the world” can be found here.

Spire discusses the impact study of DiverseCity KLIAF 2017

24 March 2018

Spire Research and Consulting was invited to join the ‘Meet The Beneficiaries’ event organized by Yayasan myNADI with Prime Minister Dato’ Sri Haji Mohammad Najib bin Abdul Razak as the guest of honor. The presentation was held on 24 March 2018 at Putrajaya with over 600 guests – mostly beneficiaries.

Datuk Dr Jeyaindran Tan Sri Sinnadurai, Chairman of Yayasan myNADI discussed the impact study of DiverseCity International Kuala Lumpur Festival (KLIAF) 2017 jointly conducted by Spire Research and Consulting and the Nottingham University Business School.

Jeffrey Bahar (Regional Advisory, Deputy Chief Executive Officer), Yap Far Loon (Lead Consultant), Haries Salim (Assistant Manager) and Nathalia Setiawan (Senior Consultant) joined the beneficiary event as supporters of KLIAF.

Datin Sunita Rajkumar, the festival director of KLIAF, briefed and handed a copy of KLIAF’s Post Event report to Prime Minister Dato’ Sri Najib.

A breakfast seminar on partnering Vietnamese firms jointly held by Spire and YCG

15 March 2018

On 15 March, Spire and Yamada Consulting Group (YCG) jointly organized a breakfast seminar in Singapore for Japanese speakers, to share insights on Mergers & Acquisition (M&A) deals in Vietnam and investment trends for market entry. An English language seminar on the same theme was held the next day. The speakers were Leon Perera, Chief Executive Officer of Spire Research and Consulting, Eiji Asano, incoming Director for YCG Vietnam and Hafidz Omar, Senior Manager at Spire Research and Consulting.

The speakers discussed the impact of growing Foreign Direct Investment (FDI) as well as the keen interest in Mergers & Acquisitions (M&A) in Vietnam.

Vietnam’s economy racked up a USD15 billion positive trade balance from 2015 with manufacturing, metals and textiles as the top export industries. Most of Vietnam’s FDI came from Asian countries like the Republic of Korea, China and Singapore.

The speakers discussed pull factors for investors, like competitive labour costs, improving infrastructure and the government’s growing reputation for good macro-economic policy. However, obstacles such as an inadequate legal system, language barriers, complicated tax procedures and limited sources of raw materials remain as impediments.

Nonetheless, 69.5% of Japanese enterprises globally were keen on investing in Vietnam.

The quantity and quality of Vietnamese companies that can be partners to international investors is growing. Larger Vietnamese firms have invested in over 63 countries abroad, with Laos as the largest destination.

Key industry sectors include textile and garments, with export revenues of USD31 billion in 2017; and the construction sector, which saw domestic revenues of USD24 billion in 2015.

In addition, the automotive sector is projected to hit 800,000 to 900,000 vehicles (units) sold each year by 2025.

E-commerce retail sales are also expected to reach USD10 billion by 2022.

While the number of M&A deals is growing, many Vietnamese acquirers have struggled with post-merger integration.

Spire hosts a session on Indonesia’s online grocery sector at Internet Retailing EXPO Indonesia 2018

24 January 2018

Spire Research and Consulting group’s Deputy Chief Executive Officer Jeffrey Bahar was honored to be appointed as moderator at the Internet Retailing EXPO Indonesia 2018, organized by Clarion Events. The summit was held on 26 January 2018 in Jakarta. It discussed growth opportunities for Indonesia’s online grocery sector.

Jeffrey Bahar, Deputy Chief Executive Officer of the Spire Research and Consulting group, moderated the discussion panel on measuring the growth of e-commerce for Food & Beverage brands in Indonesia.

The growth of online grocery sales in Indonesia and comparison to Southeast Asia markets were discussed, with retail giants such as PepsiCo, Nestlé Indonesia and Mondelēz International sharing their insights.

China’s New Silk Road Initiative – An integrated trade strategy for the 21st century?

China’s New Silk Road Initiative - An integrated trade strategy for the 21st century?

The Belt and Road Initiative (BRI), announced in 2013, is not only China’s most ambitious global infrastructure project but also one of the largest ever attempted anywhere. It aims to develop a free trade zone and improve global connectivity across the Eurasian landmass. With an estimated investment of USD4 to 8 trillion and affecting over 70 countries, can China successfully connect all these economies together?

What is China’s BRI?

The BRI mega infrastructure project aims to cement links with Southeast Asia, Central Asia, Russia and the Baltic Region. It aspires to establish a free trade zone through infrastructure developments among countries and continents.

The idea of the BRI was inspired by the ancient trade routes used by Chinese traders to boost connectivity with not only neighboring nations but with distant countries as well, such as the Roman Empire.

Pan-Eurasian trade routes were opened in 130 B.C. during China’s Han Dynasty, ostensibly for international trade, with silk as one of the major commodities. This is how the routes came to be known as the Silk Road.

The two primary components in the plan, the Silk Road Economic Belt (SREB) and the sea-based Maritime Silk Road (MSR) come together to form the ‘belt’ and ‘road’.

The SREB passes through Central Asia and connects China with Europe. The MSR passes through South Asia, Southeast Asia, the Middle East and East Africa, connecting China to these regions.

Much more than infrastructure

Deemed as the project of the century, BRI is not just another outbound investment program. Its primary focus lies in improving connectivity between Africa, Europe and Asia which it is hoped will increase development, trade and prosperity – a 21st century Silk Road.

BRI’s five key goals are:

What can the BRI offer?

The BRI is a national vision of international scope and ambition. It aspires to cultivate peace, co-operation and development; to create a ‘win-win’ situation for both the architect and participating states of BRI.

Countries on board so far

China is yet to set a concrete map of BRI initiative to link the east and the west over land and sea. Nevertheless, it reckons that over 65 nations lie along the BRI.

In addition, Chinese policy makers emphasize the fact that the BRI is open to all countries and not just those along Eurasian routes that include the following:

East AsiaChina, Mongolia
Southeast AsiaBrunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippine, Singapore, Thailand, Timor-Leste, Vietnam
Central AsiaKazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan
Middle East and North AfricaBahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Palestine, Syria, United Arab Emirates, Yemen
South AsiaAfghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
EuropeAlbania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine

The first two-day Belt and Road Forum was held in May 2017 at Beijing. 30 world leaders attended the forum. This forum is deemed to have hosted the largest number of foreign dignitaries meeting in China since the Olympic Games in 2008.

How will the BRI benefit investors?

China’s ambitious initiative to recreate the old Silk Road for trade between Asia and the rest of the world is poised to trigger massive growth for the transport, power generation and infrastructure construction sectors.

What factors will attract more countries to join this initiative?

Cheaper modes of trade

BRI’s land and sea routes will essentially facilitate smoother trade flows amongst countries within the connected regions. This will effectively cut down transportation costs and time.

For instance, a freight train launched in November 2017 runs from Kouvola, Finland to Xi’an, China to transport electronics, machineries, and other goods in a span of 17 days. This train route is faster than marine transport and cheaper than air transport.

Economic growth

Through major infrastructure projects, Chinese firms may seek to monetize the surrounding land as a means of funding projects, creating real estate opportunities in turn. In due course, job opportunities are expected to be created for locals.

For instance, the China International Trust and Investment Corporation (CITIC) – a state-owned conglomerate – raised more than approximately USD113 billion in funds for over 300 projects from Turkmenistan to Singapore; across areas such as agriculture, energy and infrastructure.

Fostering of cultural ties
10,000 students from countries along BRI routes are shortlisted every year to pursue higher education in China.

China’s BRI will fuel cultural exchanges among the countries along its routes and this has been explicitly provided for in the plan.

Under the wings of the Chinese Government Scholarship, 10,000 students from countries along BRI routes are shortlisted every year to pursue higher education in China.

In 2016, the number of students from various countries that lie along the BRI studying in China stood at 207,746, a 13.6 per cent increase over 2015.

Challenges to overcome

Risk assessment is crucial for a mega-project like the BRI. What potential pitfalls and speed bumps should investors keep a look-out for?

Excessive imports

China can export many products very cheaply, improving purchasing power in BRI economies. However, this process may hollow-out local industries, eliminating jobs.

Geopolitical tussles

Some of the BRI routes pass through disputed borders. For instance, one route crosses from Iran to Turkey but diplomatic relations among both nations are not good, which could spell unpredictable border closures and further project delays.

Moreover, some of member-states in the BRI region suffer from internal strife, poor governance and domestic instability. These issues may cast a long shadow on the likelihood of completing projects in a timely manner.


Apart from the geopolitical issues, BRI needs to curb the tendency for corruption and money laundering to creep into BRI deals. Many of the countries in the BRI region do not rank highly in Transparency International’s ranking of corruption perceptions.

In December 2015, the funding for three road projects as part of the USD50 billion China-Pakistan Economic Corridor came to a halt in the wake of reports of corruption.

Potential for debt

China’s BRI involves an investment value of close to USD8 trillion dollars in infrastructure projects that extend across Europe, Asia and Africa. This sets up the BRI as a potential global debt trap for member-states. It should be borne in mind, though, that similar concerns have been expressed in the past about loans extended by Western-dominated institutions such as the World Bank.

For instance, Sri Lanka’s Hambantota port project resulted in a debt of USD8 billion to China. Unable to repay it back, the port is now under a 99-year lease with China’s stake at 70 per cent since December 2017.

What lies ahead?

Despite the hiccups, 1,700 BRI projects worth nearly USD900 billion have either been completed or are underway - an immense achievement.

Despite the hiccups, 1,700 BRI projects worth nearly USD900 billion have either been completed or are underway – an immense achievement.

From the railway project in Kenya to lignite coal deposit extraction in Pakistan and hydropower projects in Cambodia, the BRI continues to invest heavily in infrastructure, energy and mining sectors.

However, BRI participant-states need to be cautious about opening themselves up to debt and other risks, as the Sri Lankan port case demonstrates.

But whatever the risks, most countries in the BRI region want to be participants and not be shut out. Moreover US President Trump’s withdrawal from the Trans-Pacific Partnership (TPP) gives an edge to China, as countries across the region see a void to be filled.

The BRI still has a long way to go, and will catalyze a great deal of economic development in the years ahead. Only foolhardy countries and companies would ignore the opportunities it is bound to create.

Innovation in agriculture – Meeting global food security needs

Innovation in agriculture – Meeting global food security needs

Humankind’s future ability to feed itself is in jeopardy due to the concurrent degradation of land, water, climate and biodiversity on a global scale. The human population is set to reach 10 billion people by 2050, increasing the global demand for agricultural products by 70 per cent. By 2022, India will surpass China as the most populous country in the world. Will innovation in agriculture be able to feed the global population?

The origins of agriculture

Agriculture is derived from the late-Latin word Agricultura with ‘agri’ depicting land and ‘cultura’ meaning cultivation. Starting out as hunter-gatherers, humans have gradually learned to settle in fertile places for farming and later, started domesticating animals.

The Fertile Crescent of the Middle East, which we now refer to as Egypt, Turkey, Israel and Iraq, is known as the earliest site of farming.

While it is not without its detractors, the agricultural revolution has delivered benefits in terms of the economic well-being of the majority of humankind.

Role of agriculture in 21st century

Farming in the 21st century has undergone drastic changes. New advancements in technology have transformed agricultural production and management.

What emergent farming techniques are now in play?

Sustainable ecosystems
One step to realize the potential of agriculture is to shift from exploiting resources to the restoration and regeneration of the ecosystem.

From climate mitigation and adaptation to quality nutrition and sustainable livelihoods, agriculture plays a key role in addressing many of today’s pressing challenges. One step to realize the potential of agriculture is to shift from exploiting resources to the restoration and regeneration of the ecosystem.

In 2005, Vietnam’s lagoon ecosystem was in danger from the clearing of mangroves, illegal pond structures and overfishing. This threat could have disrupted the lives of over 300,000 people.

To resolve this, fishing related activities were cut back by 30 to 40 per cent. In addition to improving the livelihood of local people, this move helped in sustaining the lagoon’s resources.

Rural investment
Contrary to the widespread perception about famines in Africa, 67 per cent of the world’s food shortages occur in the Asia-Pacific region.

Agriculture investment empowers poor farmers to increase their wealth and add to the supply of food. By 2050, food demand will increase by 70 per cent, which means USD80 billion in annual investments will be required to support demand.

By 2017, out of the 767 million people in the world who continue to live in extreme poverty, two thirds lived in rural areas. Contrary to the widespread perception about famines in Africa, 67 per cent of the world’s food shortages occur in the Asia-Pacific region.

Mobilizing new research and education

Science and technology have helped shield agriculture from risk. We now require new knowledge and education systems to understand complex biological systems.

For instance, the Pradhan Mantri Krishi Sinchai Yojana scheme launched in 2016 in India aims at irrigating farms. An online portal named ‘eNAM’ launched in the same year provides farmers with what it claims are the best prices for selling their produce.

Digital India further plans to connect 2.5 million Gram Panchayats (local governments) with a high speed internet connection. This will not only improve productivity but also increase employment opportunities.

What is driving sustainable agriculture?

The future of agriculture lies in the on-going technological revolution in farming, led by robotics and sensor advancements. Limited resources and an expanding population have led to a growing demand for high-tech systems in agriculture that include the following.


Using sensors, farmers can now check the physical and chemical properties of the soil.

For instance, Bonirob is a car-sized robot that measures the soil quality, moisture, soil conductivity and soil compaction. This was developed by scientists in Germany in 2014 through Deepfield Robotics, a Bosch-owned start-up.

Sensors can also help farmers to examine the various environmental and crop conditions and to extract field data automatically. This helps track the growth and changing requirements of the crop, enhancing productivity and mitigating risk.

Food biotechnology

In the near future, food could be produced directly from genetic tailoring in labs. Genetically designed food is an offshoot of Genetically Modified (GM) food to alleviate world hunger.

Nearly five tons of genetically engineered Atlantic salmon fillets have been sold to Canada, making the Canadians the first to eat GM salmon last year.


Technology is coming to pervade all sectors and agriculture is no exception. As the population expands, robotics is in great demand on farms.

Self-driving tractors, fruit-picking agbots (agriculture robot), smart sensors and drones are all part of the technology revolution in the fields.

Researchers are now using robots to detect the right time to harvest any particular fruit. This ensures the quality of the products while keeping costs to a minimum.


Although notorious for being the agents of diseases, microbes play an important role in agriculture. Using such organisms for farming is a rapidly growing part of agricultural biotechnology.

For instance, microbes like rhizobia can act as a converter to fix nitrogen from the air into soluble nitrates, which can act as natural fertilizers in leguminous plants.

Emerging agricultural powerhouses

Agriculture plays a vital role in the economic growth of many countries – not only emerging economies but even developed countries, many of whom (like the USA and France) have large agri-food export sectors and pride themselves on being “agricultural superpowers.”

In 2014, agriculture made up almost 40 per cent of global GDP. 43 per cent of all exports are agriculture related. Contrary to popular belief, developed countries such as the USA, France, Holland and Norway have sizeable food export industries that enjoy considerable government backing.

As far as global food exports go, a few emerging economies are worth keeping an eye on.


Agriculture is vital for India’s economic growth. The industry supported 58 per cent of rural households in 2017 as their main means of livelihood – approximately 49 per cent of the work force.

In 2013, India ranked the first in global pulse production with 25 per cent of global supply, 22 per cent for rice production and 13 per cent for wheat production.

However, India’s agricultural yield has been found to be lower than that of top producing countries like Brazil, China and the US.

India still hosts the second largest agricultural (irrigated) land globally. All 15 major climate types in the world can be found in India, with 20 agri-climatic regions.

United States of America
Approximately USD300 billion in commodities are being produced by the US agriculture sector per year.

In 2015, food and agriculture related industries in the United States contributed USD992 billion (about 6 per cent) to its GDP.

Approximately USD300 billion in commodities are being produced by the US agriculture sector per year (up until August 2017). Annually, one US farm supports 165 people.


70 per cent of Africans depend on agriculture for their livelihood in 2017 . Over 32 per cent of Africa’s GDP comes from this sector.

Unexploited growth opportunities remain for investors. Uncultivated arable land accounts for 65 per cent of Africa’s land mass.

With continued investments into agriculture, new markets have the potential to add approximately USD85 billion in export earnings per year by 2025.


Agriculture is a primary source of income for 45 per cent of the Chinese population. The growing appetite of China’s rising middle-class for food can be seen by the fact that China has become Canada’s second-largest two-way trading partner (after the United States) by purchasing approximately USD6 billion worth of Canadian food and farm exports in 2016.

China will invest CNY3 trillion by 2020 to modernize agricultural practices and boost food supply.


Brazil’s agricultural sector is expected to have grown by almost 11 per cent in 2017, adding just over USD10 billion to the economy. It will also increase subsidies to farmers by about one-fifth to approximately USD3.80 billion, to boost the 2017-2018 harvest.

The Brazilian government made investments of USD4.6 billion in 2013 in infrastructure for smooth transportation of agri-products, making it more viable to export produce.

Agriculture sector challenges

Food wastage is a huge problem for the agricultural sector – a staggering 1.3 billion tons of food was estimated to have been wasted or lost globally in 2017. With two billion more mouths to feed by 2050, only 40 per cent more of the world’s current arable land will be accessible to grow crops. This makes agricultural productivity improvement literally a life or death issue for humanity

Some of the challenges include:

Low growth

The global population is set to increase over two billion by 2050. This is likely to lead to shortages of water, soil erosion and climate change, which may degrade farmland.

Farmers will have to become more open to innovation to attain food security through technological innovations.

Volatile market prices

Prices for agricultural commodities, including food commodities and raw materials, are expected to go up by about one per cent in 2018 as demand gradually outstrips supply. This is expected to increase the prices of grains, meals and oils.

Environmental concerns

With rising concerns over food security, more attention is needed to overcome environmental issues such as air pollution, deforestation, water pollution, monocultures, fossil fuels and carbon emissions.

A staggering 260 million acres in the US and 100 million hectares in South America’s Amazon rainforest have already been cleared to make way for farmland in 2017 alone.

The future of agriculture

By 2030, an estimated 600 million people could potentially be undernourished lest proper measures are taken to boost food production, distribution and access.

Technology is disrupting and revolutionizing many traditional industries, including retail, hotels and taxis. Today, technology stands poised to disrupt agriculture with the prospect of driverless tractors, sensors, drones, Global Positioning Systems (GPS) and farm management.

Farmers need to produce at a large scale to ensure sustainability. As Russia and China grasped a century ago, agricultural consolidation is a necessary but not sufficient factor for boosting productivity and output.

Farmers need to get rid of old stereotypes, update their skills and techniques by incorporating new innovations in agriculture. Looking at how so many industries are being disrupted by technological innovation, one cannot help but be optimistic that the global agricultural sector will embrace change – as indeed it must.

The Philippines – Asia’s next economic powerhouse?

The Philippines - Asia's next economic powerhouse?

The Philippines is emerging as one of Asia’s most dynamic economies, with a forecasted growth rate of 6.9 per cent in 2018 driven by investment and private consumption. The economy recorded growth of over 6 per cent in 2017, for the sixth straight year, thanks to buoyant government spending, exports and a recovery in the agricultural sector. Will this Southeast Asian tiger be able to maintain its momentum?

A growing economy

While advanced economies like the United States, Europe and Japan are growing at slow rate, a number of emerging economies like the Philippines continue to surge ahead.

With annual growth expected to reach 6.9 per cent by 2018, the Philippines now ranks as the 10th fastest growing economy globally. Owing to strong domestic demand and government projects, the country’s economy is on the rise.

The government’s expansionary fiscal policy has aided capital formation and credit growth, whereas low inflation has strengthened private consumption.

Path to recovery

The Philippines pursues a growth policy that uses levers like attracting foreign investment, stimulating healthy domestic spending, remittances and infrastructure development.

In spite of numerous political set-backs, the government’s efforts are bearing some fruit. Some pull factors that make the Philippines an attractive destination for investors include:

Tax reform
The Comprehensive Tax Reform Program (CTRP) initiative by the Department of Finance (DOF) in 2017 aims to make the Philippines’ tax environment more competitive against its ASEAN counterparts.

The Comprehensive Tax Reform Program (CTRP) initiative by the Department of Finance (DOF) in 2017 aims to make the Philippines’ tax environment more competitive against its ASEAN counterparts. For example, personal income tax rates have been lowered.

Tax reforms are projected to add an additional investment of approximately USD4 billion to the Philippines government.

ASEAN integration

The Philippines is part of the ASEAN Economic Community (AEC), along with 9 other countries with a total Gross Domestic Product (GDP) of USD2.5 trillion and economic growth at an average of 5-8 per cent.

Being part of the AEC has enabled Philippine-domiciled businesses to expand into a larger market. The AEC could potentially become what the European Union is today and give a huge boost to the Filipino economy.

Government initiatives

The Philippine Government Common Platform (PGCP) aims to enhance government operations and services by introducing new policies and laws. One of the major transitions included changing the Philippine’s K-10 system to a K-12 system in 2013, in line with International standards.

The government is also set to spend USD180 billion over the next decade in infrastructure spending, so as to fund four new seaports, 32 new bridges and roads, three new bus rapid transit systems, nine new railways as well as six new airports.

Consumer market
The average age of a Filipino is 24.6 years – among the lowest globally and even in comparison to most other ASEAN countries.

Being the second-most populous ASEAN country with 105 million people (after Indonesia), the Philippines is nowadays seen as a promising consumer market by both local and overseas businesses alike.

The average age of a Filipino is 24.6 years – among the lowest globally and even in comparison to most other ASEAN countries. Apart from a young population with a good command of the English language, this youthful population serves as a competitive advantage in the service industry – especially for the Business Process Outsourcing (BPO) industry.

Educated and skilled workforce

Despite a historically strong economy, growth in the education sector has been muted.

Nevertheless, the employment rate in 2018 was estimated to be 95 per cent, one per cent higher than last year. However, out of the total number of unemployment residents, around 22 per cent were college graduates and close to 30 per cent completed junior high school education.

Growth potential

The Philippines is an attractive market for investors. Total Foreign Direct Investment (FDI) inflows for 2017 were valued at USD10 billion.

Key sectors of interest include:


With agriculture contributing to 10 per cent of the country’s GDP, it is now one of The Priority Investment Areas listed in the 2017 Investment Priorities Plan (IPP).

With 10 million hectares of agricultural land in 2017, major exports consist of pineapple, banana, coconut and fishery products.


Often one of the overlooked economic sectors, Filipino manufacturing continues to perform well due to the large yet relatively low-cost, educated labor force.

Expansion of major infrastructure projects and rising domestic consumption are key growth drivers of this sector, which contributes around 25 per cent of GDP as at March 2018.


Tourist arrivals in 2017 reached 6.6 million, up 11 per cent over 2016. The number is expected to hit 7.4 million in 2018 with adventure and sports tourism on the rise.

A major economic contributor in the Philippines, tourism accounts for approximately USD27 billion of GDP in 2017 with a projected growth of about 6 per cent in 2018.

Labor force

Workers in the Philippines are primarily spread across three broad sectors, industry, agriculture and services.

The labor force grew to approximately 71 million in January this year; up from 69 million a year ago. The services sector is where the largest proportion of the population is employed; close to 56 per cent of the total employed persons (as of January 2018).

Offshoring and outsourcing

The BPO sector contributes 9 per cent to the country’s GDP growth (in 2017). With robust growth, the total income for this sector is expected to reach USD40-55 billion by 2020. One of the Philippines’ fastest growing sectors, the BPO industry continues to expand at an annual rate of 20 per cent.

It is set to become the number one source of revenue for the Philippines, outpacing overseas remittances by 2018 and adding over 7 million jobs and revenue worth USD40 billion.

Challenges ahead

The Philippines economy continues to grow despite a drop in its ranking from 99 to 113 for ease of doing business in 2017. Nevertheless the challenges should not be glossed over.

Some obstacles in the way of healthy economic growth include:

Limited ownership

The Philippines restricts foreign ownership in selected industries to protect the market, including utilities and media under a Foreign Investment Negative List (FINL) in 2017.

Although the list is revised every two years, the government plans to reduce limitations to encourage FDI for certain industries which include education, construction, retail trade to name a few.

Low FDI inflow

Net inflow of FDI in mid-2017 fell, largely due to a decline in debt instrument investments from USD407 million to USD105 million, which outweighed net equity capital inflows five-fold.

The Philippines still lags behind for FDI inflows within the Association of Southeast Asian Nations (ASEAN). Even though it has 16 per cent of ASEAN’s population, it hardly receives 8 per cent of ASEAN’s total FDI for 2017 figures.


The Philippines lags behind many neighbouring countries in terms of better infrastructure development. Poor transport facilities hinder economic development and utilities provision.

Metro Manila suffers from congestion in terms of air, road and sea traffic as one of the most densely populated cities in the world.

The World Economic Forum’s Global Competitiveness Index currently places the nation in the 90th position in terms of infrastructure ranking, which undermines its ability to compete globally.


The Philippines ranked 111th out of 180 countries in the Corruption Perceptions Index (CPI) for 2017, lower than the previous two years.

Although the government established a Presidential Anti-Corruption Commission earlier this year with a hotline for citizens’ complaints among other government initiatives, more comprehensive efforts are clearly needed to curb the scourge of corruption.

Political uncertainties

In 2017, Philippine was ranked 12th globally in terms of impact due to terrorism. Although an ideal holiday destination, Western countries are wary about doing businesses and investing due to the perception of continuing instability on the security front, thus limiting economic growth.

Tackling poverty

22 million Filipinos in 2015 still live below the national poverty line – more than one-fifth of the population. Two out of five families that are poor live in Mindanao, where public investment could boost prospects for better jobs.

As jobs in rural areas are scarce, a third of Filipinos survive on fishing or farming, industries in which productivity and hence wages are very low. Most do not have the money to move to Manila for better prospects, nor do they speak the national language let alone English.

Future outlook

The tourism industry is becoming the third growth engine in the service sector, after remittances from overseas BPO-IT sector services. However, political uncertainty and terrorism cloud the prospects for economic growth.

Barring significant global political and economic shocks, the Philippines’ economy appears well-positioned for a continuous year of steady growth in 2018.

The tourism industry is becoming the third growth engine in the service sector, after remittances from overseas BPO-IT sector services. However, political uncertainty and terrorism cloud the prospects for economic growth.

Development in agriculture, an increase in the rate of employment, sustained inflow of remittances and lower inflation rates would likely bring down the poverty rate in the next few years.

Nonetheless, the Philippine Development Plan (PDP), introduced to cover the years from 2017 to 2022, aims to reduce poverty from about 22 per cent in 2016 to 14 per cent by 2020. Raising the country’s standard of living is the main goal of the PDP.

Moreover, the latest tax reforms, Philippine’s participation in AEC and various government initiatives are paving the way for it to become Asia’s next economic powerhouse.

As the Philippines’ government and elite are seized of the need to reform and have demonstrated significant progress in that direction, prospects for the country’s economy are positive, building on the nation’s natural demographic and economic advantages. Savvy investors would do well to give the Philippines a second look.

Spire E-Newsletter Q2 2017

Spire E-Newsletter Q2 2017

Spire shares insights on Halal product market trends with students at Anderson Junior College students

24 March 2017

Spire Research and Consulting was honored to be invited as a speaker at Anderson Junior College in Singapore. Spire’s CEO Leon Perera spoke on entrepreneurial opportunities in the global Halal product market, a subject where Spire has published research articles and has been quoted in global media outlets.

Leon was privileged to give a talk to students organized by the Anderson Junior College’s Malay Language, Literary and Debating Society on 24 March 2017.

Leon shared his insights on the size, growth and outlook for the global Halal products market, with a focus on entrepreneurial opportunities for Singapore-based firms.

Furthermore, he discussed certification methods used in different countries while also touching on opportunities in non-food Halal categories like skincare and logistics.

Finally, he shared his experiences and expertise on entrepreneurship followed by an interactive question and answer session.

Spire Malaysia conducts business consulting session for University of Malaya students again

17 March 2017

Economics students from the University of Malaya visited Spire Malaysia for an interactive business consulting session on 17 March. Yap Far Loon, Business Development Director, Telecommunications of Spire Research and Consulting conducted the session.

The interactive session gave students an insight on the importance of applying the right theories and tools in formulating business strategies.

The session focused on the realm of market research and consulting practices. Far Loon discussed the theoretical models deployed by Spire in business consulting while also elaborating on the planning and sampling strategies used in market research.

Spire participates as Knowledge Partner at the India Global Summit on cryptocurrency

3 March 2017

Spire Research and Consulting was honored to be appointed as the Official Knowledge Partner at the Global Summit on Bitcoin & Blockchain: The State of Cryptocurrency – Opportunities and Challenges for Indian Economy – organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The summit was held on 3 March 2017 in New Delhi. It aimed to discuss the challenges and opportunities posed by the new technology.

Yap Far Loon, Business Development Director, Telecommunications of Spire Research and Consulting, was honored to be a guest speaker at this event. He highlighted key facts about the Bitcoin & Blockchain ecosystem in India and other countries, focusing on market acceptance of cryptocurrency, security risks and regulatory issues.

Following last year’s demonetization move by the Reserve Bank of India (RBI), the government is not in favor of legitimizing Bitcoin as legal tender. However, a few industry players are working on Distributed Ledger Technology (DLT) solutions, namely Zebpay, Unocoin and SearchTrade.

Yap also shared his insights on the benefits of a Fintech Regulatory Sandbox framework used by Malaysia, Thailand and Indonesia banks in which regulators, financial institutions and entrepreneurs exchange ideas. This framework enables not only the testing of innovative ideas but also helps to reduce time, cost and risk.

The challenge still remains for the Indian government to regulate Bitcoin in a way that best unlocks the benefits of Blockchain technology in terms of transparency, accountability and consumer protection.

The interactive panel discussion concluded that skepticism still exists about the legality of the Bitcoin cryptocurrency globally. Japan officially recognizes Bitcoin, whereas Singapore and Malaysia remain neutral; those not in favor include China and Russia. In India, a great deal of interest is attached to whether the government will eventually accept virtual currencies as legal tender.

Spire selected as Official Research Partner for sixth year to the ALYA WTA Malaysian Open

27 February – 5 March 2017

Spire was honored to be appointed as the Official Research Partner for the sixth consecutive year for the ALYA WTA Malaysian Open – an international tennis tournament sanctioned by the Women Tennis Association (WTA). The event was held from 27th February to 5th March 2017 at the Kuala Lumpur Golf and Country Club (KLGCC) in Kuala Lumpur, Malaysia.

Along with the Lawn Tennis Association of Malaysia (LTAM), Spire was thrilled to be a part of this prestigious event, organized by Sime Darby – a Malaysia-based multinational conglomerate. Talented sportspersons such as Elina Svitolina, Carla Suarez Navarro, Caroline Garcia and Yulia Putintseva graced the court.

As the Official Research Partner, Spire’s Malaysia team aided organizers to improve event arrangements in the coming years using a Face-to-Face intercept research method to interview spectators.

Spire’s regular participation in this international event showcases the quality and consistency of the research we provide.

Spire and YBC host breakfast seminar on the impact of currency demonetization on Indian Economy

20 January 2017

On 20 January, Spire and Yamada Business Consulting (YBC) jointly held a breakfast seminar in Singapore to explore the impact on India’s economy of the recent Rupee demonetization of high-value currency notes. Leon Perera, Chief Executive Officer of Spire Research and Consulting, Japnit Singh, Deputy Chief Executive Officer at Spire and Yasuyuki (Luke) Kita, General Manager of YBC (Singapore), addressed the session.

Spire Singapore and YBC discussed the demonetization’s impact on different industry sectors, on e-commerce and on the outlook for doing business in India in 2017.

The speakers talked about how demonetization will spur growth in cashless transactions. Although the retail and car resale sector will suffer short-term damage, there is a visible shift towards modern trade and online transactions. Moreover, ease of doing business and transparency will rise, making India more investment-friendly.

Halal cosmetics – The appeal of an ethical lifestyle

Halal cosmetics – The appeal of an ethical lifestyle

Eco-friendly, organic and vegan are now common themes in the cosmetics industry – but Halal products are the latest trend . Halal cosmetics sales are estimated at over USD 50 billion globally and forecasted to grow at 14.6 per cent a year from 2017 to 2021 . A quarter of the world’s population is Muslim, at 1.6 billion people in 2016 . Will Halal products become a pillar of the global beauty products industry?

What are Halal beauty products?

The word ‘Halal’ means ‘permissible’ in Islamic teaching. So such beauty products may not contain any alcohol ingredients, pork or animal blood. Food products prohibited under the Islamic Sharia Law need to be avoided during manufacture. Moreover, manufacturers of such products need to adhere to strict standards throughout the supply chain. This means right from the packaging to the storage; these products must qualify as Halal.

Aside from their religious appeal, Halal beauty products have also become known for quality assurance and purity. Every Halal product requires a Halal certification which acts as proof that it does not contain any prohibited substance.

Where do the market opportunities lie?

More beauty brand-owners are realizing the potential of Muslim customers and rushing to get Halal certification. Global spending on Halal cosmetics has been estimated at USD55 billion (AED205.5) a year (as of March 2017).

The factors that will drive growth potential for investors are:-

Rise in the global Muslim population?

Muslims account for 1.6 billion people – 25 percent of the global population.

Growing awareness among non-Muslim population

In 2015, expenditure of Muslims for cosmetics worldwide increased by 10 per cent. Moreover, growing health concerns due to the effects of harmful ingredients in cosmetics products are fueling demand for “special”, niche cosmetics.

Untapped e-commerce platforms
Malaysia launched the first Shariah and Halal compliant e-commerce platform in 2016, run by the Aladdin Group of Companies.

Many organizations are keen on exploring online sales platforms for Halal-certified products. As the Muslim consumer base continues to expand, this still remains an untapped market.

For instance, Malaysia launched the first Shariah and Halal compliant e-commerce platform in 2016, run by the Aladdin Group of Companies, at an investment of USD5 million. This caters to both Business-to-Consumers (B2C) and Business-to-Business (B2B) communities across the Internet. It is also accessible via mobile applications globally.

Improved standardization and certification

Halal cosmetics are popular among health-conscious consumers too. As more products become recognized by certification bodies, consumer confidence increases.

The major Halal certification bodies include the American Halal Foundation (AMF), the Indonesian Council of Ulama, Majlis Ugama Islam Singapura (MUIS) and Jakabatan Kemajuan Islam Malaysia (JAKIM) to name a few.

Emerging markets across the globe

As the global Muslim population rises and emerging countries with Muslim-majority populations in Africa and Asia grow wealthier, the Halal cosmetics market is poised to grow.

A few emerging markets to watch for are:-


With 15 per cent of its population being Muslim, India is a lucrative market for Halal cosmetics. Cosmetics revenue is expected to reach USD39 billion by 2018.

For instance, Iba Halal Care is the first producer of cosmetic products with Halal certification. Conceptualized by two Jain sisters from Gujrat, it was launched in 2014. The line includes over 80 cosmetic products.

The Middle East and Africa (MEA)

As the Halal cosmetics sector continues to grow at 6.4 per cent a year, the MEA region cosmetics market is valued at USD 25.4 billion. Saudi Arabia dominates the region, with an overall national expenditure on cosmetics of USD5.3 billion in 2015.

Needless to say, the region continues to attract players from Germany, the UK and the US, due to a lack of a universally accepted certification body in the region.


Muslims represent one per cent of the US population, or 3.3 million people. By the year 2050, this percentage is expected to rise to 2.1 per cent.

Although the Muslim population is relatively small, it represents a market opportunity for this demographic. For instance, Amara Cosmetics launched the first of its kind Halal-certified cosmetics in 2011. These were packaged in California with accreditation from the Islamic Food and Nutrition Council of America.


The 2013 European Union ban on animal testing is one of the main reasons Halal cosmetics is picking up growth in Europe. For instance, the Halal Cosmetics Company launched its exclusive range of Halal skin cleaning and care products in May 2017 across 54 Asda supermarkets in the UK.

Challenges of selling Halal cosmetics

The Halal cosmetic market is not yet fully developed. What challenges and potential pitfalls should investors consider?

The consumer market is heterogeneous in Asia

The consumer market in Asia is very complex. Asia – and indeed Asian Muslims – comprise of various social-cultural sub-groups who speak different languages with varying norms of custom and dress. Therefore, it is crucial to first develop hyper-local strategies for marketing in order to connect to Muslim consumers.

Scope for uniform certification regulations

Halal certification is still not standardized across the world. The various certification bodies that operate globally do not use identical approaches from country to country. The certification process thus becomes more challenging when supply chains cross national borders.

Ensure authenticity of product

Halal cosmetics vendors have to not only adopt marketing strategies to local needs but reassure consumers of their products’ authenticity. Consumers might not always be aware that global brands are Halal compliant as it is not often communicated or advertised.

Reputational risk

Dealing with non-Halal claims can be a nightmare. This can cause harm to the reputation of certifiers overseas. For instance, Australia’s USD13 billion Halal industry suffered reputational damage due to claims of food being modified just to gain Halal status.

What lies ahead?

Non-Muslim consumers accounted for an estimated 30 per cent of sales of Halal cosmetics in 2016.

The market size of Halal cosmetics is expected to far exceed USD50 billion by 2020 and grow by approximately 15 per cent each year.

Due to purity, safety and hygiene factors, Halal cosmetics are now accepted by non-Muslim populations in countries like China and India. Non-Muslim consumers accounted for an estimated 30 per cent of sales of Halal cosmetics in 2016.

As the Halal cosmetics trend gathers steam, established manufacturers such as Avon and BASF have launched a range of Halal products. There is also a growing trend of start-ups entering the market, such as Amara Cosmetics and Iba Halal Care.

Furthermore, as more products flood the market, marketers are leveraging online channels for improved penetration. E-commerce and online retailing are popular platforms due to rising mobile internet usage. Halal cosmetics vendors can use these online platforms as a powerful tool to increase revenues and profitability.

Consumers around the world are increasingly considering organic and clean-label products. If Halal cosmetics manufacturers are able to market their products effectively as being pure, ethical and organic, there is a chance that Halal cosmetics will win even greater acceptance among non-Muslims.

The race to invest in Vietnam – How FDI is changing Vietnam’s economy and society

The race to invest in Vietnam - How FDI is changing Vietnam’s economy and society

Vietnam’s economy has been among the fastest growing in Southeast Asia. Today, it is a key destination for Foreign Direct Investment (FDI) in the region. In 2016, FDI climbed to USD24.4 billion, a 9 per cent growth compared to 2015. This is despite Vietnam suffering an epic drought in 2016 and a third of its vast population of 93 million people living in poverty. Vietnam has won a reputation as a cheaper manufacturing hub compared to China. Could FDI propel Vietnam to become Asia’s next Tiger economy?

A growing economy

With a USD200 billion Gross Domestic Product (GDP), Vietnam’s economy is tracking well since the start of deep economic reforms – known as Doi Moi – in 1986. Since 1990, its GDP per capita growth has been one of the fastest among emerging economies, at an average 6.4 per cent (yearly) growth in the 2000s.

Vietnam has improved provision of basic services. In 2014, the part of the population living below poverty line fell to 13.5 per cent – down from approximately 60 per cent in 1993. 67 per cent of the rural population now has access to sanitation facilities compared to 36 per cent twenty years back.

Path to recovery?

Vietnam is the sixth largest economy among the 10-member states of the Association of Southeast Asian Nation (ASEAN), ahead of Myanmar.

Some factors responsible for steady growth include:

TPP deal – revival or replacement?

With the change in U.S. leadership, the Trans Pacific Partnership will either be scraped or replaced. A replacement deal would help Vietnam as an exporter. Vietnam is also a party to 16 other Foreign Trade Agreements (FTA).

Trade liberalization
A new Law of Investment (Lol) and Law on Enterprise (LoE) in July 2015 helped streamline procedures for registration, increased eligibility for investment incentives and reduced the number of business lines prohibited to foreign investors.

Under trade deals, foreign investors receive lower tariffs. In 2015, trade liberalization and changes in permit processing for foreign investors attracted more FDI into Vietnam. More structured legislation also ensured Vietnam to become one of the major global manufacturing hubs.

Vietnam’s accession to the World Trade Organization in 2007 helped increase FDI inflow significantly. The total FDI stock was USD293 billion in November 2016, with investors from 114 countries and a total of 22,280 projects.

Furthermore, the passing of a new Law of Investment (Lol) and Law on Enterprise (LoE) in July 2015 helped streamline procedures for registration, increased eligibility for investment incentives and reduced the number of business lines prohibited to foreign investors from 51 to six, to name a few.

As Vietnam continues to progress on the reform front, this is reflected in its increased ranking for ease of doing business for 2017 – going from the 91st to 82nd position in the world.

Expanding middle-class

Vietnam’s middle-class is set to double to 33 million people by 2020, which means more consumption. This expansion is due to a gradual rise in wages and jobs linked to export manufacturing.

Merger & Acquisition (M&A) transactions

The current scale of M&A business in Vietnam is not as developed as other countries such as Indonesia, Malaysia and the Philippines but there is strong interest in M&A deals in real estate and commercial projects especially from Hong Kong, Japan, Korea and other foreign investment funds.

In order to take full advantage of a possible replacement TPP deal and the ASEAN Economic Community (AEC), the Vietnamese government enacted new policies to allow foreign investors to own and invest extensively in the real estate market, thus enhancing M&A transaction in the hospitality sector.

Move away from traditional industries

The share of high-tech exports reached 25 per cent in 2015, up from 5 per cent in 2010. Electronics is replacing traditional industries such as shoes and garments. Global electronics manufacturing giants like Intel, Canon and Samsung have massive investments in Vietnam. Policy makers also aim to increase the annual export value by eight per cent to ten per cent, which is likely to bring more revenue, higher wages and new skills for companies in this sector.

Growth potential

Vietnam is becoming increasingly attractive for foreign investors with total FDI inflows for 2016 valued at USD24.4 billion. Key sectors of interest include:

Textile and garment industry

As one of Vietnam’s largest industrial employers, the textile and garment industry constitutes of 25 per cent of labor force – more than 2.5 million workers (as of 2016). It generates 17 per cent of export revenue, valued at USD27.2 billion in 2015. This sector has been a pillar of the Vietnamese economy for decades.


Vietnam’s retail market is among the most attractive globally. Retail sales reached USD117.6 billion in 2016. Year-on-year sales rose by 10.2 per cent due to foreign investment especially from South Korea, Thailand and Japan. This is largely due to a rising middle class and young population. 60 per cent of the population are aged under 35 and are familiar with global brands as well as trends.

Tourism sector

2016 set a new record of 10 million international tourist arrivals, up 25 per cent on 2015. Visitors that top the list are from the Republic of Korea, Japan and China – making up 30 per cent of international tourists in 2016. The country’s tourist industry aims to attract 11.5 million international tourists, serve 66 million domestic visitors and register USD20.24 billion in revenue in 2017.

Education and training sector

The job market is slowly shifting towards services. To that end, parents now seek opportunities to enhance their children’s education to better prepare them for service industry jobs. Approximately 110,000 Vietnamese students went for overseas studies at a cost of USD3 billion as of 2016.

Around 27 per cent of households across the country send their children for private lessons and 90 per cent spend one to five per cent of household expenditures on supplementary lessons.

There is also a growing demand for vocational training to improve employment prospects. The expansion of Vietnam’s higher education system over the past 15 years meant that tertiary enrolment tripled from 2000 to 2013.

Only 15 per cent of working-age Vietnamese managed to complete formal skills training. Going forward, the government aims to target 55 per cent of workers by 2020.

Real estate sector

Vietnam’s real estate sector is on the rebound. It expanded four per cent in 2016, contributing 0.2 percentage points to overall growth. FDI inflows for real estate were valued at USD1.52 billion across 59 property projects.

Significant changes to the Real Estate Law in 2015 permitted foreigners to own and lease up to 250 villas or town houses – 30 per cent of an apartment building. The changes also effectively enabled foreigners to register a 50-year leasehold title on any type of property, giving foreigners the right to inherit, trade, mortgage or sublease.

There is also a growing demand for vocational training to improve employment prospects. The expansion of Vietnam’s higher education system over the past 15 years meant that tertiary enrolment tripled from 2000 to 2013.


While investors in Vietnam’s manufacturing sector have boosted exports, there has also been a surge in imports . In 2015, Vietnam registered a trade deficit of USD3.5 billion after three consecutive years of surplus.

Some challenges that hinder its economy include:

Fighting corruption

Corruption is still widely seen as rampant. This is largely due to low levels of transparency, media freedom, accountability as well as low wages for government officials and a legal system that is weak in holding officials to account.

The Central Steering Committee for Anti-Corruption was established in 2007 and since February 2013, has been under the CPV Central Commission of Internal Affairs. However, while Vietnam’s Anti-Corruption Law (2005) sets strict penalties for corrupt practices and requires government officials to declare their assets, enforcement remains problematic.

Transparency in financial sector

Trade liberalization has opened up Vietnam’s economy. This has placed greater demands on its financial sector which had been isolated from international practices and standards until the early 1990’s.

The banking system is weakly capitalized. It is also fragmented at the bottom and highly concentrated at the top. Even though the banking sector remains small, banking services and networks are on the rise. Close to 75 per cent of Vietnam’s 90 million people use limited banking services. That still leaves a large 25 per cent of the population unbanked.

Privatization of State Owned Enterprises

As at 2016, privatization of SOEs has generated USD1.6 billion through sale of companies with a book value of USD1.2 billion.

Opening up State owned enterprises (SOEs) to private investment may become a central driver of FDI in coming years. Since economic liberalization, 5,950 state enterprises have been restructured and 4,460 have been equitized. As at 2016, privatization of SOEs has generated USD1.6 billion through sale of companies with a book value of USD1.2 billion.

Infrastructure investment

Vietnam’s private and public-sector investment averaged 7.5 per cent of gross domestic product (GDP) – the highest in Southeast Asia and higher than China’s 6.8 per cent.

Nonetheless, challenges remain. Vietnam needs approximately USD480 billion through 2020 for infrastructure, including 1,380 kilometers of highways and 11 power plants with a total capacity of 13,200 megawatts.

Addressing social issues

Despite a vigorous economy, Vietnam’s record on political and civil rights remains poor. Basic rights such as freedom of religion, press, association, opinion and speech are restricted. Vietnamese courts remain under the Communist Party.

Future outlook

Vietnam’s entry into the WTO in 2007, a few years after China, was the first step towards Vietnam’s integration into the globalized world economy. Vietnam is now a magnet for international FDI and a manufacturing hub. Foreign investment has helped mobilize the capital needed to transform Vietnam’s economy, shifting it away from agriculture and towards high-tech, high-productivity job creation in fast-growing cities.

As Vietnam’s economy matures, labour costs will inevitably rise, creating pressure on Vietnam to develop a vibrant services sector as well as move manufacturing up the value-added ladder. This evolution will also challenge the financial services sector, the education sector and the government’s economic planners and regulators to “up their game”.

The Vietnam government’s skilful liberalization of the real estate sector has stimulated interest in M&A among international investors. In the next few years, M&A will likely be a major driver of FDI, including opportunities created by the corporatization of SOEs.

Turkey: A rising economic power

Turkey: A rising economic power

The Middle East is sometimes viewed as an economic failure story. But at the Western fringe of that region, a new global economic powerhouse is rising – Turkey, the transcontinental country positioned strategically between Asia and Europe. With a Gross Domestic Product (GDP) of USD786 billion for 2014, the nation opens its doors to investment across multiple sectors. Will Turkey continue to be a safe haven for investment and can it be a springboard into Europe and the Middle East?

Turkey’s steady progression

The 1980’s marked a turning point in Turkey’s history. The liberalizing reforms by visionary Prime Minister, Turgut Ozal opened up the economy. Even though the latter years were marred by economic disruption, the Kurdish conflict and a banking crisis, Turkey’s economy consolidated its gains after 2002 when the Justice and Development Party (AKP) came into government. The AKP have since made concerted efforts to institute structural reforms, new fiscal policies and macroeconomic strategies to attract foreign investment.

Turkey’s steady GDP growth – an average of 13 per cent (year-on-year) from 2002 to 2012 – is proof of its progress. As of June 2014, Turkey is the 17th largest economy in the world and the sixth largest compared to the countries in the European Union (EU) , which Turkey still does not belong to, but which it would like to join.

Growth potential

Global investors have every reason to explore this burgeoning economy for business opportunities. Some pull factors that make Turkey an attractive destination for diversified Foreign Direct Investment FDI include:

Strategic location

Turkey’s strategic location – at the intersection of Europe, Central Asia and the Levant – provides access to major markets and 1.5 billion customers across Europe, Eurasia, Middle East, and North Africa. This makes Turkey a springboard for accessing a market worth approximately USD25 trillion. The country also plans to further develop three key hub ports to position itself as a leading regional shipping logistics center. The largest port project underway – the Candarli Port – is estimated to provide 11.4 million twenty-foot equivalent units upon full completion, at a cost of €910 million.

Turks: a young and skilled labor force

Turkey has a population of 77.7 million (for 2014), with 50 per cent of the population under the age of 31 – which makes it home to the largest youth population among all European nations. 610,000 students graduate from its universities and around 700,000 students graduate from its high schools every year. Around 50 per cent of these students are from vocational and technical high schools, positioning Turkey well for high-tech and R&D investment.

Robust infrastructure

Turkey’s infrastructure plays a key role in maintaining strong growth. It continues to upkeep new and highly developed infrastructure in transportation, telecommunications and energy.

North of Istanbul, a new airport is under construction at an estimated cost of €22 billion. A bridge is under construction at a cost of €2.6 billion across the Bosphorus strait that separates Europe from Asia. Moreover, Turkey’s extensive transportation system facilitates sea and land communication with other European countries.

Turkey is located close to more than 70 per cent of the world’s proven oil and gas reserves.

At the same time, Turkey plays an important role as an energy transit partner. Geographically, the nation is located in close proximity to more than 70 per cent of the world’s proven oil and gas reserves. Some projects undertaken to increase connectivity include the Baku-Tbilisi-Ceyhan (BTC) pipeline (2006) and Baku-Tbilisi-Erzurum (BTE) Natural Gas Pipeline (2007) projects – aimed to ease transit for energy imports across European nations . Turkey is located close to more than 70 per cent of the world’s proven oil and gas reserves.

Renewable energy as a resource for Turkey

Turkey does not own any significant energy resources but its strategic location gives it access to more than 70 per cent of the world’s energy reserves. Although 60 per cent of the country’s energy consumption depends on imported energy, Turkey has the capability to reduce its dependency by using renewable resources to target 30 per cent of its total energy needs. In 2013, the World Bank Group provided USD1 billion to advance renewable energy and energy efficiency projects in Turkey.

Progressive investment climate

Turkey’s reformist and pro-growth political culture keeps investors coming to Turkey. The country promises equal treatment for all investors. As of 2014, it took only six days to set up a company while it takes more than 11 days, on average, to do the same in the countries of the Organization for Economic Cooperation and Development (OECD).

Turkey’s corporate income tax was reduced from 33 per cent in 2000 to 20 per cent in 2006.

Tax benefits along with incentives for strategic and large-scale investments have succeeded in pulling in FDI. For instance, the Corporate Income Tax was reduced from 33 per cent in 2000 to 20 per cent in 2006.

EU Customs Union

Turkey is a member of the Customs Union with the EU since 31st December, 1995 which covers all industrial goods (except agriculture, public or services procurement). Turkey also has Free Trade Agreements with 20 countries. More Free Trade Agreements are in the pipeline. Most exciting of all, the country is pursuing accession negotiations with the EU. Turkish entry into the EU would create ample business opportunities for local and foreign enterprises within the nation.

Sizable domestic market

With a population of 77.7 million in 2014 and the GDP per capita of a middle-income country (USD 10,500 in 2010-2014), Turkey’s domestic market is not to be sniffed at. The country is becoming more and more middle-class. Sectors such as telecommunications and banking have registered strong growth in both user base and revenues.

Broadband internet subscribers have increased from 0.1 million in 2002 to 39.9 million in 2014 and mobile phone subscribers increased from 23 million in 2002 to 71.9 million in 2014. Moreover, there were 57 million credit card users in 2014 when compared to 16 million in 2002.

Istanbul catches the eye of global investors

The city of Istanbul is particularly favored by investors due to its strategic location, well-established infrastructure and educated workforce. Istanbul received more than half of the total FDI projects directed to the country between 2007 and 2012.

As costs in Istanbul reflect the influx of FDI, investors have started exploring other cities such as Izmir, Ankara, and Bursa.

Borsa Istanbul (the Istanbul Stock Exchange) has ascended 30 places on the index of global financial centers since 2012. This improvement highlights Istanbul’s potential to become one of the top 10 financial centers in the world.

As costs in Istanbul reflect the influx of FDI, investors have started exploring other cities such as Izmir, Ankara, and Bursa.

Measuring investment Risk

To some degree, Turkey still struggles with corruption allegations and occasional political turmoil, which raises investment risk. What factors should investors watch for?

Low domestic saving rate

In 2014, Turkey had the lowest savings rate among 14 large developing countries – currently equivalent to 12.6 per cent of its GDP. The reason is its huge current account deficit (CAD) which stood at USD70 billion in 2013. Turkey needs to ease overdependence on imports of investment goods to improve this.

Furthermore, the nation is highly dependent on international borrowing – any increase in borrowing rates is likely to have adverse effects on the country’s economy. For instance, Turkish bank lenders suffered a substantial loss in May 2015 due to new reforms introduced by the government.

Inadequate Research and Development resources

Investors seeking to buy into innovation will have to look elsewhere, as Research and Development (R&D) capacity in Turkey is not very strong. The government has limited policies in place for research and development capacity building.

Political unrest

The political situation in Turkey has improved tremendously since the moderately Islamic AKP party came to power in 2002. The AKP government introduced several reforms such as the abolition of civilian-military courts, changes to the anti-terrorism law and greater empowerment of labor unions. However, the political instability in Turkey’s direct neighbors still poses a threat to the stability of the economy. Turkey is right next door to civil-war-wracked Syria and Iraq. Within Turkey, tensions periodically flare up between the more religious supporters of the current Turkish government and secular Turks who are skeptical of the AKP.

Future outlook

Turkey’s GDP growth rate is projected to remain steady at 3.6 per cent through 2016 – a far cry from the heady growth in its heyday, but still respectable for a middle-income country. Its liberal and attractive investment climate will continue to help Turkey to invest in sectors such as infrastructure, telecommunications and energy.

The government has set a goal of generating over USD250 billion in GDP by 2023 through investments in energy, transportation and information technology. Such projects are intended to attract big players to invest in the Turkish economy.

There is no doubt that Turkey is a large and important country that holds a great deal of promise as a market as well as an investment location. Its geographic location and skills base make it an excellent hub to export to the Middle East and Europe – and one that is deeply under-appreciated among the international business community. Turkey is an oasis of stability and development in a turbulent region of the world.

However to realize its full potential, Turkish policy makers need to put in place effective long-term institutions to protect its gains in attracting foreign investment. It also needs to address the problems of corruption and potential political divisions in the society between religious and secular Turks. Such divisions, if not addressed through strong, independent and fair institutions that command respect from all Turks, can lead to political instability of the sort that has plagued another middle-income country in the past decade, Thailand.

Nepal earthquake: Can a shattered economy be rebuilt?

Nepal earthquake: Can a shattered economy be rebuilt?

On the morning of 24 April, 2015 a powerful earthquake of magnitude 7.8 on the Richter scale rocked Nepal. With 8 million people affected and more than 4,000 feared dead, the estimated cost of reconstruction is more than USD5 billion. The scale of devastation is bound to have an economic impact on one of the poorest countries in the world, affecting industries as diverse as tourism, energy, agriculture and infrastructure. What will it take to get Nepal back on track?

The level of devastation

The damage wrought by the earthquake was felt across the breadth ot this small country. It damaged buildings in the capital city of Kathmandu. As a result of the many aftershocks, buildings and temples collapsed, with roads splitting wide open due to cracks.

Heritage sites such as Kathmandu’s Dharahara Tower (known as Bhimsen tower) – a 19th century structure with nine floors – collapsed, with at least 50 people stuck in the rubble. Dozens of historical buildings, monuments and temples – all United Nations Educational, Scientific and Cultural Organization (UNESCO) recognized sites in the Kathmandu valley – suffered significant damage or were destroyed.

The earthquake also triggered a deadly avalanche across the Mount Everest base camp, trapping climbers on the upper slopes and killling at least 17 people. The timing of the earthquake could not have been worse, striking in the middle of Nepal’s spring season – a period when most climbers attempt to scale mountains.

Industries in the line of fire

Nepal is one of the poorest countries in the world. Its economy is heavily dependent on remittances from overseas Nepali workers, such as the famous Gurkha paramilitaries who serve around the world – these amount to over 20 per cent of Gross Domestic Product (GDP). Agriculture employs around 70 per cent of the population. One quarter of its population live below the poverty line.

The devastation caused by the earthquake will have a profound effect on the already underdeveloped economy. This will undoubtedly increase Nepal’s dependency on foreign aid, affecting the following sectors.


Tourism is a major source of revenue for the largely agricultural nation, with a record 800,000 foreign tourist visits in 2014. This means that tourism accounts for 8.6 per cent of Nepal’s GDP.

The tourism sector also supports more than a million Nepalese jobs, both directly and indirectly – which account for 7 per cent of the workforce.


The earthquake, followed by a series of aftershocks, left close to 14 hydropower plants across the country damaged, resulting in a loss of 150 Megawatts (MW) of electricity from the nation’s power grid. The Nepal Electricity Authority at present distributes 564MW of electricity – out of which 210MW is imported from India.

Moreover, two of its largest hydropower facilities are located in the hardest-hit areas – the 144MW Kaligandaki to the west of the epicenter and the 22.1MW Chilime plant north of Kathmandu – along the Langtang trekking route.


The earthquake’s impact on food security and agriculture livelihoods is very high. USD8 million is needed to help Nepalese farmers recover and resume preparations for rice sowing season.

Approximately 3.5 million people need food assistance. They mostly reside in the western and central regions – including Nepal’s largest cities, Kathmandu and Pokhara.

At the same time, the disaster destroyed markets and infrastructure that is vital to the agricultural sector, including roads as well as crucial irrigation and drainage canals. Many families also lost valuable food stock, crops and livestock.

Infrastructure and logistics

The cost of rebuilding homes, bridges and roads will go up to USD5 billion or more. Nepal has been struggling to improve safety and infrastructure by updating building codes over the past two decades. The recent earthquake means that they would have to start from scratch. It is estimated that 80 per cent of new buildings are still built without the appropriate engineering expertise.

Another area of concern is logistics. A coordinated response to convey supplies to people in the outer areas around Kathmandu has proved to be a daunting task, as it means transporting supplies across damaged and landslide-blocked roads. Moreover, the influx of supplies through the nation’s only international airport and smaller airports has proved difficult.

Are relief efforts enough?

In order for relief efforts to make a difference for Nepal’s path to recovery, a coordinated international disaster relief and reconstruction program is needed. The funding needs to come from donor nations and multilateral financing agencies. What efforts have been put in place so far?

Relief from multilateral agencies

Thus far, the Asian Development Bank has granted USD3 million for immediate relief and pledged USD200 million for rehabilitation. Moreover, the UN appealed for USD15 million for essential needs over the next three months after the earthquake struck. Furthermore, USAID deployed a Disaster Assistance Response Team (DART) to the region to provide close to USD10 million in emergency assistance.

Remittances from migrant workers

Many Nepali families rely more on money sent home from the 2.2 million Nepalis working overseas, mainly in service and construction jobs across Asia and the Middle East. Remittances were double Nepal’s total revenue from exports of services and goods.

Many Nepali families rely more on money sent home from the 2.2 million Nepalis working overseas

Regional cooperation

Historical rivals China and India were among the first to lend assistance, along with Pakistan. Medical and rescue teams from other countries also came in to provide relief assistance. In the longer-term, this involvement could pave the way for better regional diplomatic and economic relationships for Nepal.

On the path to reconstruction

Reconstruction costs in Nepal could hit as high as USD5 billion. As one of the least developed countries in the world, the nation relies heavily on foreign aid – which is why it is crucial that international financial assistance is put in place for long-term re-construction.

As foreign governments and development agencies continue to pledge billions of dollars to contribute to Nepal’s reconstruction, it would be essential to check corruption and bureaucratic redtape. In 2014, Nepal ranked as the world’s 126th most corrupt country out of 174 nations, which could act as an impediment to recovery. At one point in the disaster relief operation, the UN publicly decried the fact that aid supplies were being held up at the airport by bureaucrats for lack of paperwork.

According to the UN, approximately 2.8 million people are in urgent need of humanitarian aid such as protection, healthcare, food and shelter.

Nepal is also committed to train 50,000 workers to carry out reconstruction. The government’s expenditure to rebuild private homes, historical monuments, public buildings and infrastructure will add upto USD910 million. However, for those living in refugee camps, governemnt aid is insufficient. According to the UN, approximately 2.8 million people are in urgent need of humanitarian aid such as protection, healthcare, food and shelter.

Future outlook

Observers attest that the aftermath of the earthquake has left Nepal shaken but filled with resilience – the people of this ancient nation are bound to pull itself together and recover.

Apart from a massive economic impact, the earthquake is bound to affect industries such as tourism – a major source of revenue for the largely agricultural nation – as well as hydropower, as many plants were destroyed. Agriculture – which provides a living to 70 per cent of the population – will take time to rebuild, due to the damage to irrigation, granaries, power lines and rural buildings.

However there are good grounds to be optimistic. International aid has been pouring in. Nepal’s strategic geographic locations allows it to benefit from both Indian and Chinese largesse. The tourism industry can be rebuilt relatively quickly, as tourist attractions are rural and not urban.

Above all, Nepal can draw on a talent pool of thousands of migrant workers and specialists who can send remittances back home – and, if necessary, return home to fill in gaps in skills.

Education: Will the internet transform the way we learn?

Education: Will the internet transform the way we learn?

With the global e-learning market expected to reach revenues of USD107 billion by 2015, education over the internet has become easily accessible. Demand for e-learning is growing rapidly, as a function of changes in the skills mix needed for cutting edge industries. Is the internet bound to change the way we learn?

What is e-learning?

Electronic learning or e-learning refers to computer-enhanced learning. The concept of e-learning evolved from the idea of computer-assisted instruction. A prominent example of computer-assisted instruction is the PLATO system – developed at the Urbana Campus at The University of Illinois since 1960. This system was further enhanced, leading to the emergence of content-based learning through software.

The popularity of online education continues to soar due to population growth, the availability of e-learning platforms as well as increased global internet penetration. The number of internet users increased tenfold from 1999 to 2013. In the Asian region alone, home to close to 55 per cent of the world’s population, internet penetration is 49 per cent.

E-learning platforms to explore

Once characterized by a traditional classroom model, education has evolved into learning that is online, instant, self-driven and on the go. To meet the demands of evolving learners, several e-learning platforms have emerged:


Among all the online education platforms, Moodle is one of the oldest and largest open source e-learning platforms. In other words, it is a free-to-download software. It has been called Moodle (short for modular) since 2003.

The key success factor for Moodle lies in its adaptability – educators can use the open source software for discussion forums, instant messages, online news, announcements, file downloads, online calendars, online quizzes and Wiki.


M-learning or mobile learning is a subset of e-learning. It provides technology-enabled learning solutions accessible to users from any platform. Tools that provide access to educational content via a mobile connection include Laptops, tablets and mobile phones.

Studies have shown that global expenditure on education will reach USD8 trillion by 2020 – out of which mobile education will be worth approximately USD70 billion.

Studies have shown that global expenditure on education will reach USD8 trillion by 2020 – out of which mobile education will be worth approximately USD70 billion.

Blackboard Learn

Blackboard Learn is a web-based server program for virtual learning experiences, operating since 1997. It enables the communication and exchange of content between students and teachers through announcements, chats, discussions and e-mail exchanges. Teachers can further use this to work on assignments, learning modules and tests. The program has upgraded itself to many levels, which is why institutions now use it for full online and virtual campus education instead of augmented traditional classrooms.

For instance, Boston University – a private research university based in the U.S. – uses the Blackboard e-learning tool to impart education to their students through customized training modules.

Key emerging markets

The e-learning market continues to outreach across the globe. The five-year Compound Annual Growth Rate (CAGR) of global e-learning market stood at 7.6 per cent in 2014. This growth differs according to region – Asia recorded the highest growth rate of 17.3 per cent, followed by Eastern Europe (16.9 per cent), Africa (15.2 per cent), and Latin America (14.6 per cent). The key regions where growth potential is evident include:


India has the second largest population in the world with 1.28 billion people in 2015. Furthermore, the number of internet users in India is expected to reach 213 million by June 2015 from 173 million in December 2014. This demand highlights the nation’s potential to emerge as a huge market for e-learning. India’s online education market is bound to reach USD40 billion by 2017.

Distance learning through online media is also picking up in India. Studies have shown that India has the one of the fastest rates of adoption for distance learning. This is partially due to a law that ensures that a public sector or government employee with an online degree benefits from a hike in compensation and pension.

However, challenges continue to hamper the full potential of India’s e-learning industry. Excessive inclination towards conventional classroom-based education, low broadband speed as well as limited availability of recognized online courses continue to restrict growth.


China has the largest population in the world at more than 1.3 billion in 2014. Its internet penetration rate stood at 45.8 per cent by the end of 2013. The e-learning user base in China is massive, with 632 million internet users by June 2014.

The revenues of China’s digital English language learning market are expected to soar at 23.6 per cent a year to reach USD931.8 million by 2018 from USD323.1 million in 2013.

With over 9 million high school students competing for 6.5 million available college places, China’s e-learning market is driven by factors like demand for English language proficiency, online test preparation products as well as e-learning in early childhood. The revenues of China’s digital English language learning market are expected to soar at 23.6 per cent a year to reach USD931.8 million by 2018 from USD323.1 million in 2013.

However, concerns surrounding low standards and questionable credibility of e-learning continue to hinder its growth in China.


Widely seen as the most dynamic e-learning market in the world, steady growth in Africa is supported by government initiatives, technology companies and non-governmental organizations (NGOs). According to one study, the overall growth rate for e-learning in Africa is 15.2 per cent. Africa had a 10.3 per cent share of worldwide internet users in 2014.

New technological marvels such as eBooks, tablets and cloud computing technology are facilitating rapid development in this market.

However, challenges such as high electricity costs and broadened variety of languages hinder growth. Nonetheless, technology companies and governments are working to deploy solar and wind power stations to lower the electricity costs associated e-learning devices.

Stepping into digital culture

Effective education techniques are always evolving. What is driving the rapid growth in the e-learning sphere?

Corporate learning

Organizations now realize the value of online learning to enhance their employees’ knowledge in ways that are flexible, cost-effective and tailored to each individual’s skill-sets. A large number of open online courses are finding their way into the office. Millions of users are flocking to these free or low-cost web courses.

Moreover, employees or potential candidates are learning the relevant skills an organization needs at their own pace, thus reducing the time and cost for future training. Massive Open Online Courses (MOOCs) have been preferred by elite universities, but have recently surged in popularity among large corporations and organizations. For instance, McAfee revamped their new-hire orientation procedure using MOOC’s, reducing the training duration significantly.

Flexibility in learning

Learning through text-based or even video-based tutorials is now a thing of the past. New learning styles are emerging, offering online learners more interesting and interactive learning experiences. Gamification is one of the emerging trends in 2015. It is the concept of applying game mechanics and game design techniques to engage and motivate people to achieve their goals.

Flipped learning is also taking flexible learning to new heights. This is a form of blended learning where students watch video lectures to learn content online and then do homework with the guidance of teachers in person. This creates an interesting learning environment for both teachers and students.

Online learning flourishes in educational institutions

E-learning has crossed all the boundaries of school and college education to change the entire learning spectrum, including internet-based coaching for examinations. The high potential of this space has attracted many private players like Core projects, Educomp Solutions, Everonn Education and NIIT, who now have an established presence in this category.

E-learning in schools and universities has witnessed rapid adoption across many countries. For instance, ChinaEdu in China has over 311,000 online students in both degree and non-degree programs (as of September 2014). Furthermore, ChinaEdu reported 211,000 students enrolled in their online degree programs, a 14.5 per cent increase over the year before in 2013.

Skill training and measurement

E-learning providers are now focusing on a specific skillset or knowledge area. In future, this category will prove to be game-changing within the education industry. AT&T – a U.S.-based telecommunications enterprise – is a prominent example of an institution rolling out skill specific education to train its employees – with skill measurement systems to gauge ROI.

Moving forward

The online education industry is poised to reach great heights. Ultimately no classroom, lecture theatre or excursion bus will be untouched. Factors such as availability of tried-and-tested e-learning platforms, growth in population as well as increasing internet connectivity are steering the industry forward. The growing number of e-learning platforms is encouraging students in both urban and rural areas to attain education using the internet.

India, China and Africa are booming online education markets. However, challenges continue to hold back full-fledged growth in these countries.

One of the key factors that will be needed if e-learning is to dominate the education sector is the emergence of great e-learning brands – brands that have widespread awareness, a tremendous track record and empirical proofs of pedagogic effectiveness. E-learning providers – both educational institutions and ICT vendors – need to cultivate strong e-learning brands and the research to show that their approach works. Traditional education has great brands – think Eton, Harvard, Oxford, the Sorbonne and Tokyo University, to name a few. The world is ready for the rise of great e-learning brands.