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Thomas McNutt, Head of Regional and Public Affairs, AmCham Singapore

12.12.2013 / Energyboardroom

The head of regional and public affairs at AmCham Singapore discusses the increasingly fruitful trading relationship between Singapore and US, and the manner in which AmCham endeavors to foster close bilateral business ties.

The American Chamber of Commerce (AmCham) in Singapore celebrates its 40th year anniversary in 2013. Can you begin by providing our readers with an overview of the Chambers history and some of its most notable milestones?

When we started out, we were a committee of the American Association of Singapore (AAS), which I believe is 96 years old now. To give you an overview of our operations now, we have almost 800 member companies, represented by over 5,000 nominated professionals. We are the largest AmCham in Southeast Asia (SEA), and have a strong regional focus. Approximately 75 to 90 per cent of our member companies use Singapore as a regional hub because the Singapore market is a small domestic market with 5 million inhabitants yet neighboring Indonesia has 250 million inhabitants, and Malaysia, Thailand, Vietnam and the Philippines all have large populations. ASEAN has set a goal of full establishment of the economic community by 2015 and, because of this, increasingly our member companies see the region as a single market, conveniently situated in between India and China.

There have been American businesses in Singapore for a long time, including prior to the city-state’s status as an independent nation. In the early 1970s, the AAS formed a committee focusing on economic affairs which eventually separated to form AmCham.  Over the years, we have established a very good relationship with the local government and authorities. Our activities frequently consist of networking opportunities, creating platforms for insight which allow companies to better understand their competitors and source potential collaborators as well. Last year we managed 275 events. It is a crowded schedule, and because of this we have a four person dedicated events team.

We have both American and non-American members incorporating companies large and small. The varied heritage of our companies provides a unique platform for engagement and communication across the business community allows American businesses to learn a great deal, and vice versa. Companies with their background in Asia, on the other hand, can engage with a more western way of doing business. Singapore is certainly a cultural crossroads. As I mentioned, however, American companies have been here for a long time and frequently have a great deal of heritage here. They tend to hire the best people they can find, which further allows them to cope well with local conditions.

How are your events scoped and organized?

Events consist primarily of two types, general industry events- last year there were around 140 of those- and committee meetings which tend to meet once a month. One of our most active committees is our energy committee. Lately they have hosted speakers including a partner from the US law firm Jones Day who spoke about the expansion US shale gas, its ramifications on Singapore and the LNG markets’ potential. This month, the executive president for Shell’s upstream integrated gas spoke about gas and the environmental footprint of gas, specifically highlighting the opportunities inherent in changing the energy footprint of the region. Our energy committee engages a great deal with oil and gas, but will also look at renewable energy. Our energy chairs represent the diversity of interests in the group. For example, one is Panos Cavoulacos of Schlumberger who has decades of experience in the oil and gas industry, and another is John Viverito lawyer with Gibson Dunn, focused on energy and mining laws, with some further expertise in oil and gas.

As a heavily export orientated economy, Singapore relies on external economic cooperation. In the earlier phases of ASEAN’s existence, Singapore took a “global” rather than “regional” stance in its external economic strategy but after the 1997 Asian financial crisis, Singapore became much more pro-active in its economic integration with ASEAN. How has this development affected economic ties and political relations with the US and your members?

In general, the US and Singapore have a very good relationship. I am not sure if the increasing focus on the regional market by the Singaporean Government has in any way impacted the relationship between Singapore and the United States. President Obama’s ‘pivot’ towards the SEA region has indeed reemphasized America’s interest the wider region. From the Singapore side, the shift to a more regional focus makes sense as Singapore recognizes that it is surrounded by markets built on sectors with the potential for huge growth. Indonesia, Malaysia, Thailand could leap forward economically in the near future, and of course Singapore is ideally positioned to engage with those markets. A great diversity of companies have their Asia Pacific headquarters here. The more Singapore and ASEAN can do to streamline regulation in this area, the more attractive the area will be for business, including our members.

On the topic of the tightening labor laws in Singapore intended to boost productivity, Mr. Robert Dompelling of PEC Engineering told us that ExxonMobil was instrumental in voicing the concerns of the industry and communicating the negative effects of their rushed policies on the foreign labor intensive downstream and engineering sector. As liaison between your members and the local government, what role is the AmCham playing in addressing this issue, or any other industry concerns?

Whilst some might be concerned that there are a lack of locally trained engineers sourced locally, I must stress that Singapore remains a great place to do business. I have to be clear that Singapore is not turning off the “spigot” of non-nationals entering Singapore, but is rather trying to reduce the rate of the flow. Singapore’s primary goal is to increase the quality of life of its citizens and it is trying to use foreign labor policies as lever with which to do this.

Singapore is, of course, an autonomous nation and can decide to set policy as it best sees fit. However, we would like to ensure the Singaporean Government is aware of how our members perceive these changes and understands the impact that our members expect these changes to have. Thankfully, Singaporean Government workers are some of the most engaged and dedicated in the world, and they generally take a strong interest in how policy impacts business on the ground. Nevertheless, we would like to see even greater dialogue between the Singaporean Government and our member companies to further discuss the implications of labor market policy.

In terms of how the restrictions on foreign labor will affect businesses, they will almost certainly increase costs, and higher costs obviously make it harder to do business. However, it is important to stress that the business-government relationship is not an adversarial relationship, but a collaborative one. And, as a result, I am sure the Singapore government understands that its policies are increasing costs, but I am also just as certain that the government will closely monitor the effects of those cost increases and adjust its policies as appropriate.

Additionally, the Singaporean labor market should not be seen in isolation, as neighboring countries are able to supply cheaper labor and increased acreage. Industries based on lower skilled labor, or industries which require a great deal of land, are increasingly outsourced across the border, providing a net benefit for both countries. The future economy here should be conceived of as representing the ‘greater Singapore region’.

Every company we have spoken to so far has highlighted how they like to use Singapore as a gateway to Asia, a strategy AmCham too seems to be pursuing as demonstrated by the first ever recent business mission sent to Myanmar, among others. From your perspective, what makes Singapore such an excellent springboard into the region for commercial and non-commercial organizations?

Annually, we produce a publication entitled the ‘ASEAN Business Outlook Survey’, which reports the concerns and aspirations of business leaders. Basically this report is unique because it polls top level American executives across the ASEAN region in which we ask general outlook questions. Revealingly, it found that only in Singapore and Brunei were executives satisfied that there was not a significant problem with corruption. Strengths across the region include personal security and stable government.

Respondents in Singapore are dissatisfied by costs, which in one respect can be considered a good thing, as it means there is a booming local economy. That being said, neighboring countries like Indonesia also have strengths, such as the availability of low cost labor.  The balance of positives and negatives from each country needs to be evaluated. Executives in this region have a solid understanding of the pros and cons of each country, which results in clear priorities for businesses- almost half of respondents to our survey answered that they were planning to expand in Indonesia.

Stable government and infrastructure are some of the key factors which result in businesses siting their headquarters in Singapore. In fact, 96 per cent of respondents from Singapore said they had multi-country responsibility. This demonstrates Singapore’s positioning as a springboard to the wider region’s economy.

The ASEAN economic community, which aims to be completed by the end of 2015, would represent one of the world’s largest markets. There are a huge amount of opportunities here and that is why the area, particularly Singapore, is such an attractive as a business destination.

As the AmCham continues to strengthen its members and its own positioning in Singapore, what goals would you like to achieve and in what areas do you intend to strengthen the Chambers positioning?

Corruption must be addressed across the wider region. Broadly speaking, the culture which exists must change from one where corruption is tolerated or accepted as a way of life, to one where it is stamped out.

Indonesia is making commendable efforts to stamp out corruption, though some of the Indonesian Government’s other policy objectives such as decentralization of political power make this target more difficult to attain.

Every country in the region has made efforts to reduce corruption, and the situation is certainly better than it was twenty years ago. However, there is still a ways to go. As a result, we regularly have presentations on the Foreign Corrupt Practices Act (a U.S. law), which both serves as a constraint to forbid Americans and American companies from engaging in corruption and as a best practices guideline for countries in the region.

The harmonizing of ASEAN economic practices is another key challenge. To the Singaporean Government’s credit and to countries across the region, they are not only aware of this, but also very focused on driving this harmonization to completion. ASEAN is seeking to achieve the integration of these economies by 2015 and the anticipated completion of this goal is yet another reason why AmCham Singapore is confident our members have great opportunities here at SE Asia’s crossroads.


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