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Singapore. Exxon Mobil overview

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outlook on Singapore's economy and FDI incentives from Exxon Mobil

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Page 1: Singapore. Exxon Mobil overview
Page 2: Singapore. Exxon Mobil overview

ExxonMobil investments in Singapore

The roaring, dynamic, global “Lion City” in Asia Experts:

Zsofia OlahNatalia Turkina

Kinga LadomeryDmitriy Pustovalov

24/04/2012

Page 3: Singapore. Exxon Mobil overview

Agenda

• Singapore in general• Singapore – world class economic example• Doing Business in Singapore vs. the USA• History of ExxonMobil• ExxonMobil today• ExxonMobil invests in Singapore• Why did ExxonMobil choose Singapore?• Conclusion

24/04/2012 Slide 2

Page 4: Singapore. Exxon Mobil overview

Singapore in general

24/04/2012 Slide 3

Page 5: Singapore. Exxon Mobil overview
Page 6: Singapore. Exxon Mobil overview

The Republic of Singapore is the most competitive Asian country and the fastest-growing economy in the world.

• population: 5,1 million (2011)• density: 7,315/km2 (3rd)• area: 710 km2 (189th) consists

of 63 islands• 1965 became independent• unitary parliamentary republic• PresidentTony Tan Keng

Yam• Prime Minister Lee Hsien

Loong

• GDP (2011):• Total $314.911 billion• Per capita $59,711

• 10th largest foreign reserves• Gini (2009) 47.8 (29th)• HDI (2011) 0.846 (very

high) (26th)• unemployment below 2%• 10,784.6 Foreign Investments

($m)

Page 7: Singapore. Exxon Mobil overview

Singapore is…

• …the best city according investment potential.

• …in the top 2 most competitive countries in the world

• …the only Asian country to have AAA credit ratings from all three major credit rating agencies – Standard & Poor's, Moody's, and Fitch.

• …the 14th largest exporter and the 15th largest importer in the world.

• …the world's fourth-leading financial centre

Page 8: Singapore. Exxon Mobil overview

Singapore is…

• …the world's second-biggest casino gambling market

• …the world's third-largest oil refining centre

• …the world's fourth largest foreign-exchange trading centre

• …the least bureaucratic place for doing business in Asia.

• .. the 7th in the world and 1st in Asia for having the least corruption in its economy

• …among the top 3 in foreign trade and investment

Page 9: Singapore. Exxon Mobil overview

FOREIGN DIRECT INVESTMENT IN SINGAPORE BY COUNTRY/ REGION, 2006-2010p

(Stock as at Year-End)Country/Region 2006 2010

Total 370,494.7 621,884.5

Asia 82,485.0 150,241.2

Europe 174,058.3 233,114.4

United States 38,325.0 67,189.5

Canada 2,736.4 3,837.2

Australia 3,318.7 7,619.6

South and Central America, and Caribbean

60,876.4 137,735.5

Other countries 6,990.2 19,871.8

ASEAN 12,116.9 21,007.5

European Union 131,405.6 182,118.6

Million Dollars

Source: Singapore Department of Statistics, 30 December 2011

Page 10: Singapore. Exxon Mobil overview

Singapore – world-class economy example

Page 11: Singapore. Exxon Mobil overview

History

WHAT IS THE SECRET OF SUCH SUCCESS?

• 31 August 1963 – Independence from the United Kingdom (after being a British colony for 140 years)

• 16 September 1963 – Merger with Malaysia

• 5 August 1965 - Singapore declared its independence -> Republic of Singapore.

• “Singaporean” culture and social identity ->  by late 1989 physically small Singapore became an economic giant.

Page 12: Singapore. Exxon Mobil overview

Singapore – world-class economic example:

Key to success

Lee Kuan Yew1st Prime Minister of

SingaporeElections: 1959-1988Won Battle against

Corruption

English is one of the official languages

Various reforms

Singapore – one of the four “Asian Tigers”

Page 13: Singapore. Exxon Mobil overview

Singapore – world-class economic example:

Key to success

EDUCATION

REFO

RM

•British-style system at schools; English + Chinese, Indian, Malaysian dialects; spending ~ 6% of GDP; free primary education + funds for high education.

INDUSTRIAL POLICIES

•Policies ensured that direct foreign investment was viable, allowing Singapore to become a serious contender on the international market.

TECHNOLO

GICAL DEVELOPMEN

T

• The National Computer Board (since 1981) - to help establish Singapore as an international center for computer services (Now it is Infocomm Development Authority)

• First copyright law (1986) – to avoid trade sanctions by the western markets and to attract foreign companies to the country.

Page 14: Singapore. Exxon Mobil overview

Singapore – world-class economic example:

Key to success

MANUFACTURI

NG

•By 1988, the Singapore manufacturing sector was producing more economic returns than both the financial and business sectors due to emphasis on large international companies.

THE

PETROLIUM

FACTOR

•Late 1980’s - Singapore was the world’s third largest oil-trading centre and as the centre for refining petroleum.

LEGACY

• Free trade and free markets, in combination with a dominant government role in macroeconomic management and government control of major production enterprises.

Page 15: Singapore. Exxon Mobil overview

Singapore – world-class economic example:

country’s industrial priorities

The major industries in Singapore: • Electronics• Oil and gas• Financial services• Shipping• Chemicals.

Maintaining country’s competitiveness by:• diversifying into value-added activities in the

manufacturing and services sectors;• identifying and investing in new growth sectors, such as

clean technology and biotechnology.

Page 16: Singapore. Exxon Mobil overview

Doing business in Singapore vs. the USA in 2010

CATEGORY SINGAPORE USA SOURCE

Ease of Doing Business 1 4 World Bank, Ease of Doing Business Report

Country with Lowest Tax Misery (2009) 11 18 Forbes Tax Misery and Reform Index

World’s Most Competitive Economy 3 4 World Economic Forum, Global Competitiveness Report

World’s Best Country for Business 5 9 Forbes Best Countries for Business List

Country Most Open to Trade 1 19 World Economic Forum, Global Enabling Trade Report

World’s Most Competitive Economy 1 3 IMD, World Competitiveness Yearbook

World’s Most Innovative Economy 7 11 INSEAD and the Confederation of Indian Industry’s Global Innovation Index

World’s Freest Economy 2 8 Heritage Foundation’s Index of Economic Freedom

World’s Most Economically Globalized Country

1 57 KOF Index of Globalization

World’s Best Labour Force 1 2 BERI’s Labour Force Evaluation Measure

Country with Least Corruption Perception 1 22 Transparency International’s Corruption Perceptions Index

Page 17: Singapore. Exxon Mobil overview

ExxonMobil in Singapore

Page 18: Singapore. Exxon Mobil overview

History of ExxonMobil

• Rockefeller and his associates form the Standard Oil Company combined facilities constituting the largest refining capacity of any single firm in the world.

• Standard Oil Co. purchases a three-quarters interest in Vacuum Oil Company.

1870 1879

Page 19: Singapore. Exxon Mobil overview

History of ExxonMobil

• Standard Oil Trust forms to include the Standard Oil Company of New Jersey and the Standard Oil Company of New York.

• Standard Oil breaks up into 34 unrelated companies, including Jersey Standard, Socony and Vacuum Oil. -the first time Jersey Standard's sales of kerosene

1882 1911

Page 20: Singapore. Exxon Mobil overview

History of ExxonMobil

• Jersey Standard acquires a 50 percent interest in Humble Oil & Refining Company of Texas.

• “Esso” was introduced- Embodying the phonetic rendition of the initials ‘S’ and ‘O’ in Standard Oil

1919 1926

Page 21: Singapore. Exxon Mobil overview

History of ExxonMobil

• first trans-Atlantic Boeing 707 flight from New York to London with Mobil oil

• changes its name to Mobil Oil Corporation

1958 1966

Page 22: Singapore. Exxon Mobil overview

History of ExxonMobil

• Jersey Standard officially changes its name to Exxon Corporation.

• Exxon Research and Engineering invents a powerful new imaging technique called 3-D microtomography

1972 1986

Page 23: Singapore. Exxon Mobil overview

History of ExxonMobil

• On November 30, Exxon and Mobil join to form Exxon Mobil Corporation.

• ExxonMobil finalizes its agreement with XTO Energy Inc.,

1999 2010

Page 24: Singapore. Exxon Mobil overview

ExxonMobil today• Headquarter: Irving, Texas, USA• Operates around 50 countries around the world

Operating divisions:

- Upstream (oil exploration, extraction, shipping, and wholesale operations) based in Houston, Texas

- Downstream (marketing, refining, and retail operations) based in Fairfax, Virginia

- Chemical division based in Houston, Texas

Page 25: Singapore. Exxon Mobil overview

ExxonMobil todayProducts: fuel, lubricants, petrochemicals

Page 26: Singapore. Exxon Mobil overview

Financial Data

US$ billion in year of 2011Revenue 486.429 Operating income 73.257Net income 41.060Total assets 349.000Total Equity 154.396# of employees 82.100

Page 27: Singapore. Exxon Mobil overview

ExxonMobil in Singapore

Milestones• 1893- the set-up of the Vacuum Oil Company,

which sold mainly kerosene and lubricants under the Mobil Oil brand name.

• 1916- Standard Oil, set up an office • 1931 - Vacuum Oil merges with the Standard Oil

Company of New York (Socony) to form Standard-Vacuum Oil Company, or Stanvac

Page 28: Singapore. Exxon Mobil overview

ExxonMobil in Singapore• 1963 - Mobil decides to go into refining

business. Esso starts a chemical operations department which later became Exxon Chemical Singapore Pte. Ltd.

• 1966 - Mobil opens Singapore's first refinery • 1971 - Mobil in Singapore becomes Mobil Oil

Singapore Pte. Ltd.• 2007 - All service stations converted to Esso

brand

Page 29: Singapore. Exxon Mobil overview

Brands

Page 30: Singapore. Exxon Mobil overview

Activities

• Singapore refinery• Singapore Chemical Plants• Fuels Marketing• Lubricants and Specialties

Page 31: Singapore. Exxon Mobil overview

Incentives of FDI in Singapore

1967: Liberalize tax

system

For non-pioneer firms: tax exemption

of up to 90 % - 5 years

For pioneer firms: 7 enjoy tax exemption

for up to 10 years

Tackle industrial relations

Reduce labor costs

Page 32: Singapore. Exxon Mobil overview

Why did ExxonMobil choose Singapore?

Jurong Island – Energy&Chemical hub

Industry cluster with 95 global companies including ExxonMobil

$ 4 bn invested in a refinery and cracker plant

Page 33: Singapore. Exxon Mobil overview

Why did ExxonMobil choose Singapore?the biggest Asia’s leading oil trading hub and pricing center

the leading bulk liquids logistic hub in Asia and ranks amongst the top three in the world

access to recourses has displaced low labor costs as the key driver of competitive advantage

political and macroeconomic stability

availability of skilled labor

is a major aviation and shipping hub – that provides good access and connectivity to destination markets.

Page 34: Singapore. Exxon Mobil overview

Why did ExxonMobil choose Singapore?

• - free trade agreements with United States, EU, Japan, NZ, India, Korea, Peru, Jordan, Brunei, Chile

• - Singapore is ranked No.2 worldwide as the city with the best investment potential for 16 consecutive years

• - the world leader in foreign trade and investment with the most open economy for international trade and investment

• - government allows the movement of both capital and profit freely within and outside the country.

• - tax incentives and tax holidays• - strong Singapore dollar is not hurting export of

ExxonMobil

Page 35: Singapore. Exxon Mobil overview

Conclusion

Page 36: Singapore. Exxon Mobil overview

Conclusions:Lessons for the others

What should other countries learn from Singapore?

• Political stability• High level of education• Open-market policies• Modernized infrastructures• Attracting foreign investor policies• Sustainable long-term economic objectives

That’s why the most successful investment in Asia by ExxonMobil were in Singapore

Page 37: Singapore. Exxon Mobil overview

THANK YOU!

Page 38: Singapore. Exxon Mobil overview

References

• http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/Guide_to_Investing_in_Singapore.html

• http://www.singstat.gov.sg/• Department of statistics, Singapore http://www.singstat.gov.sg/• Doing Business in Singapore vs USA

http://www.guidemesingapore.com/research-reports/usa/doing-business-singapore-usa• Singapore: A Future Economic Powerhouse? by Exequiel Octavio Bertaina, Staff Writer

http://www.arbitragemagazine.com/features/singapore-future-economic-powerhouse/• Exxonmobil.com• Exxonmobil.com.sg• Department of Statistics Signapore http

://www.singstat.gov.sg/educorner/faqsinvestment.html#qn6• Economywatch http://

www.economywatch.com/foreign-direct-investment/countries/singapore.html• Outward FDI by Singapore: a different animal? By Gaute Ellingsen, Winfried Likumahuwa and

Peter Nunnenkamp• Official Efforts To Attract FDI: Case Of Singapore’s EDB, By Augustine H H Tan, National

University of Singapore