SInterCom interviews the Chairman and Chief Executive Officer of UOB, Mr Wee Cho Yaw.
UOB is now pushing forward with computerization, do you foresee the Bank connected to the internet and doing business over the net in the future?
The internet is going to be the global communication channel. Our group will, therefore, have to use it. The challenge is how to make the most effective use of this international network which is already choked with information about everything and anything.
We do not want to be in just for the sake of being in. I have told my Information Technology staff that they should look into ways to maximize our business opportunities through the net.
UOB seems to be quite active in promoting the arts and in community services, could you briefly tell us the bank's main contributions in these areas?
We Chinese have an old saying, 'What one receives from the community, one should also return to the community.'. I have always stressed that the UOB's progress to date is mainly attributed to the support that we have received from the people of Singapore. It is only right, therefore, for the bank to contribute towards the society that has nurtured us in the past 60 years.
It is for this reason that we decided to donate S$10 million to charities, educational institutions and cultural groups in Singapore and Malaysia when we celebrated the UOB's 60th anniversary and the Official Opening of the UOB Plaza on the 6th August 1995. This money was distributed among more than 100 organizations in the two countries.
As for the arts, our main contribution is in the support of the visual arts. Since 1982, UOB has been organizing a Painting of the Year competition annually to encourage the budding artists of Singapore. What is most gratifying is that many of our past year's winners have become household names in the Singapore art scene.
During UOB's anniversary celebrations, you mentioned in your address that UOB intends to become a global bank. How do you plan to do this? What are the likely obstacles that you might have to overcome to make UOB a bank of international standing? Within what time frame do you hope to achieve it?
Singapore is a relatively small country, and I expect that it will be a matter of time before the Government further opens Singapore to more foreign banks. For these two reasons, we have to look overseas for our future expansion.
Globalization, however, is not going to be an easy task. We not only need to review our operational structure, we will also have to change the mindsets of our staff who have, until now concentrated their energies on the local market.
Globalization also means that we will have to step up our presence in the rest of the world. For a start, we will be strengthening our presence in the Asia Pacific Rim because this area offers the best growth potential in the foreseeable future. In the longer term, we will have to also expand our activities to Europe and the US.
Besides opening up more branches and offices overseas, we will be looking at joint ventures with reputable financial institutions in the region and the rest of the world.
Globalization is going to take time and great effort. We are making a start, but I envisage that it will take decades before we will be recognized as a truly global bank.
What do you think are the obstacles to resurrecting the former Nanyang University?
First, let me clarify that I do not believe that one can resurrect history. The old Nanyang University was a special product of its times. Singapore was then a British colony. Today, the social and political environment is completely different. I do not think that a university which only teaches in Chinese is viable in Singapore today.
When I speak of NTU reverting to its old name Nanyang University, therefore, all I am suggesting is that the word 'Technological' be dropped. Although NTU started out as a university concentrating on technological subjects, it has been expanding its other courses over the past few years. It is now a comprehensive university.
It would appear to be appropriate for the university to revert to its old name. What I would like to see is a greater emphasis on Chinese courses in the University. NTU already has a Centre for the Study of Chinese Language and Culture. If we can further develop NTU into a centre for Chinese studies, we would be reviving the original spirit which founded Nanyang University decades ago.
Are you optimistic that Nantah can become a Southeast Asian centre for Chinese research and teaching? Will it be possible and viable?
Since I am not a member of NTU, I really am not in a position to talk about NTU's capabilities. However, I do know that the University is taking steps to expand its Chinese courses. And in view of the current interest in doing business with China, I am certain that the study of Chinese will be popular among the pragmatic Singaporeans.
Do you think that the younger Chinese generations are losing their cultural heritage? Should the standard of Chinese language requirement be further relaxed?
I would say that in the late Seventies and the early Eighties, there was a discernible drop in interest in the Chinese language and Chinese culture. But following the setting up of the Singapore Federation of Chinese Clan Associations (SFCCA), and the 'opening up' of China, the situation has improved considerably.
In the past couple of years, there has been renewed interest in things Chinese. There is now greater interest in Chinese customs and festivals, and among the younger Singaporeans, Mandarin is quite widely used.
However, there is still a core of Singapore Chinese who feel more comfortable with English and who do not see the need to know Mandarin. These people see learning and absorbing from the West as being 'modern', they consider many of the Chinese traditions as irrelevant and old-fashioned.
Our challenge is to 'convert' these young people to the view that the knowledge of the Chinese language and the Chinese heritage will further enhance their lives. My personal observation is that these intelligent young Singaporeans cannot be won over by coercion. We will need to win them over by persuasion and through activities which they are interested in.
One major business consideration in Singapore today is the high property and rental costs. Do you think that such prices are sustainable? What are their present and possible future effects on the economy?
Property price increases in Singapore are largely the result of the robust economic growth over the past few years. But as the Singapore economy matures, slower growth rates are expected and this may have an impact on property prices.
This impact however, could be moderated to a certain extent by Singapore's success in developing an external wing. Another influential factor is the continuation of foreign interest in the local property market.
High property prices and rental costs will inevitably push up operating costs. This, in turn would affect Singapore competitiveness vis-a-vis the developing countries in SE Asia and HongKong.
It has been said that the major source of Singapore's economic growth is Foreign Direct Investment (FDI). Many have pointed out that such reliance on FDI is also our Achilles heel. Do you agree with such views? What do you think is the state of privately owned small and medium enterprises in Singapore since 1985? Has their share of GDP increased?
While it is true that FDI has contributed greatly to Singapore's economic success, the statistics show that local enterprises ( defined as companies with at least 30% local equity) accounted for 93% of total manufacturing, commerce and services sectors in 1992. Of the 88,044 local enterprises, 87,097 were defined as SMEs (manufacturing SMEs are those with fixed asset investments of less than S$12 million and services SMEs are those with less than 100 workers each).
In 1992, SMEs employed 44% of the workforce in the manufacturing, commerce and services sectors. They contributed 27% to the value-added of these three sectors. Within the manufacturing sector, SMEs account for 78% of the total establishments and 35% of the total workforce.
The statistics also show that the percentage of local investments in the manufacturing sector has been rising steadily over the past few years. In 1990, for instance, foreign investments account for 89.2% of total commitments in the manufacturing sector, versus 10.8% local investment. In 1994, FDI's percentage had dropped to 75.1% while local investments had risen to 24.9%.
Of course I would like to see a higher content in local investments, but I think we should also recognize that the FDI has brought tremendous benefit to Singapore. Not only have the MNCs brought capital, technology, managerial expertise and markets, they have also provided jobs for Singaporeans.
Those who argue that the high FDI is Singapore's Achilles' heel are probably voicing their concern of the adverse effects on the Singapore economy in the event of a pull-out by the MNCs. However, I am inclined to believe that so long as Singapore retains its competitive edge, and so long as the Asia Pacific Rim continues to prosper, the MNCs will continue to find Singapore an attractive place to be in.
China, India, Vietnam, Australia and Indonesia are a few often mentioned investment hot spots. How would you rate them in terms of their risks and potential?
Of the five countries you have mentioned, I would say that China, Indonesia and Vietnam offer better business potential. The low wages of these three countries, their huge markets (with a combined population of 1.5 billion) and the investment incentives provided by their governments, make them highly attractive to investors.
However these are developing countries and as such, they also pose certain risks. For one thing, the legal infrastructure tends to be weak. In China and Vietnam, for example, land laws, banking and accounting laws are not always very clear cut.
There are also political risks to be considered when investing in these countries. Another negative factor is the reports of rising corruption.
Although the legal infrastructure of Australia and India is more developed, the strength of the labour unions and political opposition to the liberalization of their economies make these two countries less attractive to foreign investors.
In the drive to sprout a second wing in Singapore's economy, who are going abroad? Are they mainly GLCs or private enterprises? How do they fare when competing with foreign firms from say, US and Taiwan?
I do not have comparative figures to say whether the GLCs or private enterprises dominate Singapore's foreign investments. What is apparent is that many Singapore companies and the GLCs are responding to the Government's call to regionalize. Projects range from the huge Suzhou Industrial Park to small restaurants and factories set up in the newly developing countries such as China and Vietnam.
In the case of China, I would hazard the guess that Singapore companies are more competitive than American enterprises in setting up small and medium sized businesses. I suspect that the Singapore firms going to China enjoy an advantage because our people are able to speak the Chinese language and are better equipped to understand the local culture and sensitivities. By the same token, I think we tend to lose out to the Taiwanese and HongKongers, who have also been investing heavily in China.
How do you think Singaporean's saving and spending habits have changed over the last 10 years?
The figures indicate that Singaporeans are saving more these days. Gross national savings in 1980 amounted to S$8,282 million accounting for 34.2% of the GNP. In 1990, however, it had shot up to S$29,930 million and 43.9% of GNP. Last year (1994) gross national savings rose to S$52,178.3 million, accounting for 49.8% of the GNP.
As for our spending habits, a Straits Times article dated 6 April 1995 pointed out two noteworthy changes as reflected in the 1992/93 Household Expenditure Survey.
Firstly, Singaporeans appear to be spending less on food. In the 1987/88 Household Expenditure Survey, Singaporeans spent and average of 40% of their monthly income on food; in 1992/93 however, this had dropped to 30%.
Conversely, spending on housing rose from 17% to 23% between 1987/88 and 1992/93, while spending on transportation rose from 14% to 16% during the same period.
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