Why Singapore's businesses must double-down on due diligence and corporate compliance

In a time of universal deceit, according to Orwell, telling the truth is a revolutionary act. In today's business environment, truthful business is no longer a revolutionary act, but is a necessary component of responsible and sustainable business practice.

This will form the precedent in Singapore – a globalized city and a leading APAC hub. Singapore owes its renewed vigour to increasing internationalisation – driven through the US$2.6 trillion ASEAN Economic Community (AEC) and the US$28 trillion Trans Pacific Partnership (TPP) pacts. Both AEC and TPP will spur economic development – domestically and across the region – accelerating growth and transformation.

With increased international scrutiny and regulators who are not tolerating opaque and unethical practices, measures to address and prevent corruption are essential for Singapore and ASEAN firms to continue to compete at a regional and global business level.

Amid this 'comply or die' environment, it will become crucial for competitive businesses to make sense of cross-border complexities, value longer term implications of compliance, and ensure consistent enforcement of anti-corruption and due diligence frameworks.

Growing complexities
For Singapore-based firms working across borders, the lure of a unified ASEAN marketplace presents cross-border trade opportunities that are important and lucrative, but also highlights challenges, particularly when maintaining a consistent due diligence process.

You’re a business with a dozen, maybe a hundred, even thousands of suppliers across the region. How do you use the same yardstick to evaluate each of them? How do you verify the accuracy of information a thousand kilometres away from your headquarters or branch office? And how do you maintain the quality of your due diligence programmes while increasing the number of suppliers, in line with your businesses' growth?

One way to handle the region's complexities is to systemically identify and manage the firm’s due diligence and compliance programmes. They could consider the help of professionals to benchmark processes and offer training to employees. This helps management focus on running the business, knowing that they can make better, more-informed decisions, mitigating risks.

Rising cost of non-compliance – Singapore's 'Pinocchio Paradigm'
In Singapore, there were 591 mergers and acquisitions worth US$101.2 billion in 2015 alone, up from US$50.7 billion in 2014, according to corporate finance advisor Duff & Phelps. IESingapore noted that, in 2014, there were 609 international acquisition deals made by Singapore businesses, at a value of US$60.2 billion.

As Singapore continues to grow, spurred by the TPP and AEC pacts, so do opportunities for businesses. With larger operations come higher risks of non-compliance. These businesses will need to think sustainability and business transparency, particularly when dealing with increased regulatory scrutiny, evolving legal requirements, and rising accountability from customers around transparency and compliance.

Businesses that do not have sound due diligence and compliance strategies in place will face questions – serious ones at that – from stakeholders. This only serves to restrict them from availing of the growing number of cross-border opportunities in the longer run.

Transparency as an ongoing process
So you’ve considered a cross-border strategy as crucial for success. You've placed an emphasis on sound due-diligence and anti-corruption compliance processes. Now what?

Regulations and frameworks aren't static – due diligence is an on-going process. The company needs to ensure that it keeps up with the times, consistent with legal frameworks across markets.

Ask not what your country can do for your business
Compliance, corruption, and business ethics – these challenges aren't national, or even regional in nature. They transcend every nation's borders. They implicate every stakeholder, at every level. At a business level, building an environment of business transparency – and enforcing it – will be key – not just for business success – but also to drive successful economic integration, realising the potential of pacts like AEC and TPP.

The benefits available to Singapore businesses through an ASEAN Economic Community – with over six hundred million people, trillions of dollars in opportunities, and fourteen million new jobs by 2025 – are too strong to ignore. Governments realise this – ASEAN became a reality in the sixties, a testament to the vision and foresight of its leaders and its community spirit. Countries will find it in their best interest to work together to enforce anti-corruption compliance frameworks, keeping their businesses in line.

With these enormous political, economic, and geographic shifts, Singapore's business leaders must be at the top of their game and embrace, implement, and enforce transparent business practices, doubling down on due-diligence and corporate compliance.