Korea-Singapore relationship bears fruit

SINGAPORE--The island-state is proving to be an effective springboard for Korean IT vendors looking to establish new businesses in Southeast Asia, according to senior officials from iPark Singapore.

At least 50 to 60 Korean companies have established partnerships with vendors here since the Korean non-profit government agency, iPark, set up its Singapore office in October 2002, said Bob Chua, chief executive director of iPark Singapore, during a meeting with reporters here last week.

Founded in 1998 by the Korean IT Industry Promotion Agency (KIPA) and the Korean Ministry of Information and Communications, iPark helps the country's IT companies penetrate global markets and establish alliances with local players in those markets. Its focus covers a range of technology and services including broadband convergence, Internet Protocol version 6, RFID (radio frequency identification), systems integration and software development.

Besides Singapore, Chua's team is also responsible for the rest of Southeast Asia including Malaysia, Brunei, Vietnam, Cambodia, Thailand and Indonesia.

iPark Singapore clocked an export value of between US$60 million and US$70 million last year, compared to US$30 million in 2003 and US$60 million in 2004. These amounts refer to revenues earned by Korean IT vendors from projects, which include products and services such as software, systems integration (SI) and digital content, deployed in the markets that iPark Singapore covers.

The largest portion of last year's export value came from SI, while about US$10 million to US$15 million were from digital content development, such as online games, Chua said.

He added that Malaysia and Thailand have been the two most successful markets in terms of revenues and the number of projects that have been inked in those countries.

Depending on each country's level of IT advancement and maturity, iPark chooses to focus on different areas, he explained. For example, infrastructure services are one of its primary focus areas for emerging markets such as Vietnam, while IT security, and games and other forms of digital content development are more closely looked at in Singapore.

The Singapore government last year committed to a hefty S$1 billion (US$590.5 million) investment to develop the nation's digital media industry and establish it as a hub for processing, managing and distributing multimedia content including games and music. One of the government's objectives, for instance, is to encourage foreign game developers to use Singapore as a platform to localize and distribute their gaming content to other parts of Asia, such as China or Thailand.

With Korea's thriving games industry, the potential for meaningful partnerships to be formed between IT companies from both countries is high.

Leo Hwa Chiang, iPark Singapore's business development director of digital content, however, said Korean vendors have yet to venture into alliances that involve joint development of games or content localization.

"The feedback we've received [from the Korean companies] indicates that there hasn't been much success in this area for various reasons," Leo said. To localize content in a software game, for example, the developer will need to export all its source codes--and intellectual property--out of Korea into Singapore, he said.

"Korea is located very close to China, so the companies would prefer to work directly [with the companies] there instead of going through Singapore," Leo explained. "Also, Thailand has already modeled its own [government] agency after [Korea's] KIPA."

But Singapore still has its attractions, and the island-state stands out because of its sound infrastructure.

Chua said: "The Korean vendors view Singapore as a good testbed and sampling size [for their products]. What these companies do most here is to set up alliances."

"Singapore has seen the greatest 'pass through'," he added. "It's been like a gateway, an entry-point, for 70 percent of our Korean IT vendors who come here to form partnerships, and then dissipate to establish business in other parts of the region."

Singapore-based Panimx Asia-Pacific is one such example. The developer of IT security and IP telephony products last year sealed a partnership with Korean security vendor Ahnlab, to be the latter's key product distributor for Singapore, Malaysia, Brunei and Vietnam.

Said Phoon Wai Leong, director, Panimx Asia-Pacific: "We wanted an antivirus product, something that was good, well-tested but may not be a well-known brand in this part of the region." Ahnlab has 60 percent of the Korean market share, but it is still an unknown brand here, he said.