Well-positioned for the mooted single ASEAN economic community, Singapore’s firms are flexing their muscles to become go-to regional players
Riding the economic growth wave of the South-East Asia region, Singapore is a hot spot for global investors and multinational corporations. It is thought the island state is home to more than 7,000 multinationals and 60 per cent of their regional headquarters. And the figures are still growing.
Shell, for example, has moved the HQ of its integrated gas business to Singapore from Europe. General Motors is also moving its head office for its international operations from Shanghai to Singapore.
Apart from those from the US and Europe, a substantial number of Japanese companies have also moved key operations to Singapore – Hitachi Infrastructure Systems being the latest.
Among the 130 foreign law firms already in Singapore, a number have reflected the office’s strategic status with senior-level partner relocations. UK firm Holman Fenwick Willan became the first Western firm to relocate a member of its global leadership team to Singapore when senior partner Richard Crump moved over in April.
Although Singapore is a promising market with growing opportunities, competition is fierce, and it has never been an easy market for international firms to crack.
A major event for Singapore’s expat community in the past year was the renewal of the first six qualifying foreign law practice (QFLP) licences handed out to international firms in 2008. The QFLP allows a foreign firm to practise certain areas of Singaporean law.
Only four licensees got a five-year full renewal. Herbert Smith Freehills (HSF) decided not to reapply and White & Case has been granted only a one-year conditional licence, to be extended subject to meeting quantitative targets set by the ministry of law.
A source familiar with the renewal process and requirements says the revenue and lawyer headcount targets for QFLPs are pretty tough, given the competitive nature of the market.
Apart from losing its QFLP licence, HSF has also seen a sizeable team of partners and lawyers leave its Singapore office since its merger in October 2012. Most recently, it lost South-East Asia litigation head Maurice Burke to Hogan Lovells. At the end of 2013, legacy Freehills Singapore managing partner John Dick left for EY, which is in the process of launching a legal services unit.
Rumours abound that some new entrants are undercutting to win work, meaning that growing revenue is now even harder for existing players.
Meanwhile, savvy Singaporean firms are using their regional experience to competitive advantage in their home market, increasingly going up against the global players for regional work.
Rajah & Tann is the first of the ‘Big Five’ in Singapore to build up its South-East Asia regional network, a process it started in 2010 when it opened in Laos. Today, the firm boasts 500 lawyers, populating a network that stretches across nine of the 10 ASEAN countries.
Last year two other top-tier Singaporean firms embarked on regional expansion. Allen & Gledhill opened a branch office both in Myanmar and Laos, while WongPartnership established an alliance with Malaysian corporate boutique Foong & Partners.
WongPartnership’s deal with its Malaysian ally has generated the immediate opportunity of working on the Iskandar Malaysia development project, near Johor Bahru, an important gateway to Singapore.
According to WongPartnership co-managing partner Rachel Eng, the firm’s Malaysia move is just the first step in its ASEAN regional expansion plan.
“The ASEAN countries have a goal of creating a single regional market and achieving economic integration by 2015,” Eng continues. “Although the regional governments are slow in coming together, there’s been some excitement in the business community about this development – we’re making sure we don’t miss the boat,”
She indicates that Indonesia and Myanmar are two of the key markets the firm wants to tap into next, with Thailand and Vietnam also being considered.
Dispute resolution hub
Singapore’s reputation as a leading venue for international arbitration has grown. In 2013 the Singapore International Arbitration Centre marked a record when new case filings increased by 10 per cent,
to 259 from 235 in 2012. The total in dispute reached S$6bn (£2.8bn), with the highest claim standing at S$3.5bn.
Singaporean firms have benefited from the growing arbitration caseflow. Rodyk & Davidson, for example, reports 10 per cent year-on-year revenue growth. Managing partner Philip Jeyaretnam attributes a large part of this to dispute resolution.
The launch of the Singapore International Mediation Centre and the Singapore International Commercial Court (SICC) will set the city-state up as a multifaceted centre for dispute resolution.
Singapore’s push to become a regional dispute resolution hub has not only driven firms to strengthen their offerings in this area, but attracted more English barrister’s chambers to open up.
Fountain Court Chambers plans a September launch, while London commercial sets with a presence on the ground include Stone Chambers, Essex Court Chambers, 20 Essex Street, One Essex Court and 29 Essex Street.