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SINGAPORE INTERNATIONAL – Big market in projects from int’l agencies

S’pore firms can grow their overseas businesses and leverage on the IOs’ facilities

Many Singapore companies do not realise how big the market is for projects awarded by international organisations (IOs) like the Asian Development Bank (ADB) and World Bank. The World Bank and ADB jointly award about US$31 billion of business projects annually through loans, grants and technical assistance programmes to developing countries.

In fiscal 2007, the World Bank committed US$34.3 billion in loans, grants, equity investments and guarantees to its 185 member countries. ADB approved US$7.9 billion of loans and US$241.6 million in grants in 2006.

According to ADB, from January 2001 to June this year, Singapore companies won US$548 million of contracts from ADB-financed projects. In terms of World Bank-financed projects, local firms were awarded just US$158 million in contracts from 2000 to 2007.

Besides these two huge organisations, others like the Inter-American Development Bank, the Andean Development Corporation, the African Development Bank and the various agencies of the United Nations also award contracts for development projects.

These IOs are an additional and viable source of business for Singapore companies. The channel funds to health care, education, transport, water and sanitation, agriculture, public administration and governance, financial sector development and the environment.

Apart from the obvious financial aspect, there are many benefits to be had by partnering and working with IOs.

They are a good way to grow international business through overseas consulting projects, civil works contracts and the supply of equipment and goods. And ventures in developing markets are slightly less risky because IO-funded projects typically come with payment guarantees.

While dipping their feet into overseas markets, companies can also leverage on the IOs’ facilities like political risk insurance and debt/equity project finance. Access to these facilities helps strengthen the value proposition when striking out abroad.

A subsidiary benefit of taking part in such projects is the satisfaction of contributing to the long-term needs of developing countries.

‘International organisations like the ADB and World Bank have established systems and networks to serve the financial and technical needs of developing economies,’ says IE Singapore’s deputy chief executive officer, Chua Taik Him.

‘Singapore’s knowledge and experience in developing its economy, particularly infrastructure development and urban management, are highly relevance to these countries.’

According to IE Singapore’s IO division assistant director G Jayakrishnan, areas in which Singapore companies can participate are bidding for contracts for consultancy work, goods and civil works, as well as in public-private partnership and other projects.

Consultancy and procurement contracts range from providing advice, education, training and health care to urban planning, transport and logistics, infocomm technology, water and environmental management, he says.

But Singapore firms may be unfamiliar with the typical cycles of IO-funded projects and may not have a strong track record if they are new to a market.

Recognising the huge potential of the IO-related market, IE Singapore set up a dedicated International Organisations division in 2004. IE helps in two main areas:

  1. First, it raises awareness of opportunities while equipping companies with the knowledge and competencies to partner IOs. IE Singapore, in collaboration with the IOs, organises regular procurement and business opportunities seminars and workshops, said Mr Jayakrishnan. These broad-based outreach activities are supplemented by one-toone company-level advisory sessions that aim to provide in-depth information to companies.

  2. Second, IE Singapore identifies IO-related project opportunities and channels these to Singapore-based companies. The referrals are backed up by on-the-ground market assistance and intelligence from IE’s overseas offices.

    IE also helps by raising awareness among IOs of the capabilities, pools of expertise and track record of Singaporebased companies. For example, sector-specific briefings are organised for IOs, at which Singapore companies can present their solutions to IO officials and project team leaders, while the latter give more information about upcoming projects. Programmes to showcase Singapore’s development experience in sectors such as education, water resource management and urban management are also arranged.

    IE is also establishing longer-term institutional partnerships with IOs, like the Asia Training and Research Initiative for Urban Management (Atrium), which it signed with ADB in March. Under this initiative, which focuses on cooperation activities in the areas of urban master-planning, urban transport management, water and environmental management, Singapore will provide up to US$1 million over the next three years, while ADB will complement this with up to US$2 million of ADB-supported technical assistance and loan projects in the various developing countries.

    ‘IE Singapore aims to help Singapore-based enterprises leverage on IOs to participate in international projects and contribute to the growth of developing countries,’ says Mr Chua.

    The IO projects market is large and Singapore companies have unique strengths that enable them to take advantage of it. With the help of IE Singapore, it seems likely their market share will continue to grow.

     

    Source: Business Times 22 Nov 07

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