January 2016 | Sangeeta Menon

'Singapore is the nodal country for ASEAN'

Ever since he took over as Tata Sons’ resident director for ASEAN in January 2014, one of KV Rao’s top priorities has been to create synergies amongst the group companies and facilitate the growth of the group in the region.

A resident of Singapore for almost two decades, Mr Rao is a firm believer in the ASEAN story, which began for the group with its base in Singapore. In a freewheeling chat with Sangeeta Menon, he explains why ASEAN is poised to be the next big opportunity for the Tata group. Excerpts:

The Tata group has had a rather special relationship with Singapore. Could you tell us a bit about this?
The Tata group has been 90 percent partners with Singapore in its economic history of 50 years. The Tata-Singapore connection goes back to the time when the newly-independent Singapore invited JRD Tata to set up a precision engineering unit and a training institute in Singapore.

The Tata group did not come with an ambitious business plan to Singapore; the then leaders of our group came with a vision to see how they could engage meaningfully with a country that was newly independent, and support its skill development.

What role does the Tata Sons office in Singapore and you as resident director play in enabling and enhancing the group’s business interests in the country?
The group office’s goals are multifarious. One, it helps create a central point of contact and deepen the engagement with key stakeholders such as governments, policy makers, financial institutions, sovereign funds, strategic global partners, and so on. Two, it engages in advocacy, advisory services and supporting individual companies’ growth agenda. Three — this is a gentle role — we seek to facilitate the business development of our group companies, look at opportunities for growth from a group perspective and work as local guide to them. The last, and most important, element is to build synergies across companies that operate in a market, to deliver a Tata group image that is far more powerful than the different individual parts themselves.

Synergy plays at a strategic level where we are seen as one and operationally we learn from each other, as we leverage each other’s contacts and resources. It allows our companies here to say that we are a group which employs over 3,000 people and has wide business interests in Singapore and the region. So, instead of navigating on your little boat what you are actually doing is moving like a flotilla of ships.

Singapore is fast emerging as one of the leading innovation centres in Asia. Is there a tie-in here with the Tata group’s focus on innovation?
Singapore has become a major innovation hub and has already attracted global giants such as Glaxo and Philips to set up their innovation and R&D centres. This nation is aiming to create the perfect ecosystem for innovation, R&D and entrepreneurship, offering various incentives for collaborative research. Singapore as a frontier for the Tata group’s innovation, entrepreneurship and digital foray is a possibility. The group technology office and Tata Industries have been evaluating the possibilities present here. Over the next few years, we should see traction in this space.

Is Singapore going to be the hub from where the group manages its ASEAN expansion?
Singapore acts as a nodal country for the region. All the markets in ASEAN, representing over 660 million people with a $2 trillion economy, are important to our companies. From a group perspective, we have identified two focus markets: Vietnam and Myanmar. We are now working on deepening the engagement with these markets from a strategic and operational point of view.

Under Tata Sons, we have offices in the US, the UK, the UAE, China and Singapore, each working with focus markets that fall within that region. Singapore lends itself perfectly to this role for the ASEAN region because of the sheer convenience and connectivity, ease of doing business, the attractive international headquarter programme that offers better tax incentives, and so on.

Where does the ‘Tata in Singapore’ story go from here? How do you foresee the group’s expansion in ASEAN?
By virtue of the sheer size of the population of ASEAN nations and the huge potential demand that it creates, the ASEAN story is a compelling one. What makes it more attractive is the strong cultural linkage between the ASEAN countries and India.

The clear opportunity I see is that many of our products and services that have been designed for Indian needs are closer to what an ASEAN consumer needs and expects — be it value for money, sizing, quality, presentation and so on. I see ASEAN as a natural extension of business from India, which makes a compelling case to offer our products and services in these markets.

This interview is part of a special report on Tata group's presence in the ASEAN region, featured in the January 2016 issue of Tata Review:
Overview: Foothold in ASEAN
'We want to encourage global innovation', Vinod Kumar, managing director and CEO, Tata Communications
'We learn a lot from this market', Girish Ramachandran, president, TCS APAC
'NatSteel will focus on sustainable profitability', Ashish Anupam, president and CEO of NatSteel Holdings
'Singapore is pivotal to our ASEAN growth', Anish Raghunandan, vice president, East and South Asia, Tata Technologies
'Singapore is a key market for us', J Niranjan, CEO, Tata Capital Pte
'This year looks set to be a record year', PV Balasubramaniam, CEO, York Transport Equipment (Asia)
'An asset-light strategy is our preferred path', Dinesh Shastri, managing director, Tata NYK Shipping Pte
'We will consolidate our business here', Alfred Egli, head, minerals vertical, Tata International Singapore Pte
'Our opex costs are industry benchmarks', SS Varma, vice president, operations, Trust Energy Resources Pte