- POSTED: 27 Jun 2014 20:02
- UPDATED: 27 Jun 2014 23:13
Legal experts say Singapore companies are not spending enough resources on addressing new, emerging risks which could pose a threat to their reputation.
SINGAPORE: Amid the push for local firms to venture abroad, legal experts warn of political and regulatory risks that businesses must consider while expanding into the region.
They say many Singapore companies are not spending enough resources on addressing new, emerging risks which could pose a threat to their reputation.
More Singapore companies are venturing abroad in pursuit of growing opportunities in the region.
Some 26,000 Singapore companies got help from International Enterprise Singapore in their overseas plans last year, up 23.9% from the year before.
However, legal experts warned of ongoing political uncertainty and regulatory risks which Singapore firms must consider while treading into unfamiliar territory.
Adrian Chan, Honorary Secretary of Association of Small and Medium Enterprises (ASME), said: "You have problems with enforcing contracts overseas, because Singapore corporates are not familiar with the laws there. The laws aren't necessarily similar to Singapore and Malaysian laws.
"For example, Myanmar law used to be based on English law but is now based on the military law; Thailand is a different set of laws altogether. Indonesian codes are based on the Dutch codes, completely different rules and regulations...
"On top of that, even if you get judgement in a foreign court, it's hard to enforce it."
Meanwhile, industry watchers also highlighted new and emerging risks.
Cyber security and social media risks are growing issues in today's digital age.
According to a survey by law firm Clifford Chance, some two-thirds of Asia Pacific respondents said that social media can be a reputational game-changer while more than one-quarter were focused on cyber risk, particularly at a time when safeguarding reputation is a top priority of Asian firms.
80% of Asia Pacific board members surveyed view potential damage to their company's reputation to be more important over the next two years.
Valerie Kong, a partner at Clifford Chance, said: "Many Asian corporates have built up their brand and reputation over the last few decades and they're relying on their reputation to take them into new markets as they strive to become significant regional players, and also global organisations.
"So the challenge for Asian corporates are when they have to have a risk management strategy that works across borders."
However, experts said corporates in Singapore and across the region are not devoting enough resources to these new risks.
ASME's Adrian Chan said: "Cyber security is something that Singapore corporates don't place enough emphasis on...
"The cyber security spend is not enough and Singapore corporates need to brace themselves for that risk.
"Social media, too. The possibility of reputational risk being impaled and harmed because of something going wrong in the company that's not expected is very high.
"So you can find yourself in a social media firestorm without even knowing it. Corporates need to understand that they need to have a 'crisis playbook'."
While more than half the Asia Pacific firms surveyed acknowledged data protection as a major concern, only 12% are focusing on cyber risk.