Singapore companies to invest 30% more in emerging markets

But 77% of Singaporeans polled worry about political stability in the emerging markets.

In a release, Tata Communications revealed the findings of a unique research study into emerging markets and their impact on the global economy. The report, conducted by independent research company Vanson Bourne, surveyed 1,600 business leaders from emerging and developed markets, and reveals that 96% of companies in Singapore have looked to emerging markets for growth opportunities, highlighting the growing influence of developing markets in the global economy. Singapore companies demonstrate the widest interest in global markets and are considering markets such as Chile (21%), Mexico (19%), Hungary (15%), and Morocco (13%) for future expansion.

According to the survey, companies in Singapore expect to increase their investment in emerging markets by 30% in the next year, the lowest of all markets surveyed.

87% of business leaders from both developed and emerging markets (China, India, South Africa, France, Germany, Hong Kong, Singapore, the Middle East, the USA and the UK) are actively engaging in emerging markets, despite 56% acknowledging that they associate emerging markets with political instability. 55% of Singaporean respondents, 45% of Middle Eastern and 40% of South African businesses have already set up operations in emerging markets, the only markets in the survey to have a higher figure with an established presence than those considering such a move (e.g. India, China).

51% of all respondents (including respondents from China, India, South Africa, France, Germany, Hong Kong, Singapore, the Middle East, the USA and the UK) stated that their organisation is looking at expanding into China, with 39% selecting India and 33% Brazil.66% of companies in Singapore are looking to China for growth with 40% selecting India, and 44% considering Indonesia as a potential market.

The challenges
There are significant challenges ahead of those looking to operate in emerging markets. When asked to select their single most critical challenge for organisations moving to an emerging market respondents were almost evenly split with 18% citing government regulation, 16% established competition, 14% finding skilled staff and 11% communications and digital infrastructure. Respondents in Singapore identified government regulation and established competition as their most critical challenges in moving into new markets.

57% of all respondents, and 77% of Singaporean respondents, stated that political stability would prevent them entering an emerging market. The Singaporeans are the most concerned with political stability of all the markets surveyed, while 57% of Singaporean business leaders also cited lack of skilled, local staff as a blocking factor.

The opportunities
The main driver for moving to emerging markets is the potential to capitalise on growth opportunities with 63% of business leaders, and 76% of Singaporean respondents surveyed, selecting this as a reason. In line with the focus on growth, competitive activity is also a factor with 16% of Singapore companies selecting this as their main reason for moving into emerging markets. The survey reveals that on average respondents who are looking into, or are already operating in emerging markets; expect to increase investment in emerging markets by 36% over the next year. 

Respondents in Singapore most associate emerging markets with significant opportunities for growth (82%) and cost effectiveness (55%), however 53% of Singaporean business leaders also look to emerging markets for scale.