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Straits Times
40 minutes ago
- Straits Times
‘Some cannot source outside China': S'pore firms' challenges and support needed amid US tariffs
Koda is a Singapore-listed furniture firm with operations in Malaysia, China and – most crucially – Vietnam. SINGAPORE – For the past three months, business owner Ernie Koh has been cycling through various scenarios in his head, pending finalisation of tariff rates for Vietnam. Mr Koh is director of Koda, a Singapore-listed furniture firm with operations in Malaysia, China and – most crucially – Vietnam, which struck a trade deal with the Trump administration on July 2. He has scenarios for both good and bad outcomes for Vietnam, and more 'what-ifs' that pit Vietnam against other markets that his competitors operate in, such as India, Malaysia and Indonesia. But the lack of detail on the tariffs and how other countries will be affected has created something of a Rubik's cube for firms trying to navigate these testing new waters. When US President Donald Trump declared sweeping global tariffs in April and warned countries not to sneak Chinese products into America through false declarations, Mr Koh asked his import shipping company to detail the amount of Chinese-sourced material in his products. 'It's only 6 per cent. Some of the fabric you cannot source anywhere outside of China,' he said, pointing out that there are four or five Singapore companies making furniture in Vietnam. The US is the biggest export market for Vietnam, and the biggest buyer of its furniture. The country has won a reduced 20 per cent tariff on its goods to the US, and 40 per cent on transshipped goods. Top stories Swipe. Select. Stay informed. Singapore HSA intensifies crackdown on vapes; young suspected Kpod peddlers nabbed in Bishan, Yishun Singapore Man charged over distributing nearly 3 tonnes of vapes in one day in Bishan, Ubi Avenue 3 Singapore Public healthcare institutions to record all Kpod cases, confiscate vapes: MOH, HSA Singapore Man allegedly attacks woman with knife at Kallang Wave Mall, to be charged with attempted murder Singapore Singapore boosts support for Timor-Leste as it prepares to join Asean Singapore UN aviation and maritime agencies pledge to collaborate to boost safety, tackle challenges Singapore High Court dismisses appeal of drink driver who killed one after treating Tampines road like racetrack Singapore 18 years' jail for woman who hacked adoptive father to death after tussle over Sengkang flat About 70 per cent of the finished products from Koda, which was set up in 1972, end up in US homes through stores such as Crate & Barrel, big-box retailers like Costco, and other brands it manufactures for. Mr Koh hopes the Singapore Government will turn its eye to businesses like his – Singapore-registered but operating overseas – that have traditionally been seen as successful and needing little support. The Singapore Economic Resilience Taskforce set up to help businesses ride out these challenges on July 10 announced the Business Adaptation Grant, which will disburse up to $100,000 to a firm on a co-funding basis. Koda, if deemed eligible, could expect help in areas like trade compliance advisory, contracts, supply chains and market diversification. It could also get a lift for costs in logistics and inventory holding. But the task force also noted that a bigger scoop of the pot will go to local small and medium-sized enterprises (SMEs), which account for more jobs. Details are expected in October. The Association of Small and Medium Enterprises (ASME) and Singapore Business Federation have been ramping up support through advisory services, workshops with trade experts to evaluate cost and regulatory risks in alternative hubs like Indonesia and India, as well as trade missions and symposiums. Some of the assistance is to mitigate competition from Chinese businesses, which have turned their attention to markets outside the US to invest in and sell their goods. Local businesses have never been cornered like this until now, where trade pressures, technological disruption and intensifying competition from Johor arrive in a perfect storm, said ASME president Ang Yuit. The association has observed that companies are activating diversification plans in the wake of the tariff that the US is imposing on Vietnam goods. The immediate challenge is 'managing potential 20 to 40 per cent cost increases for US customers due to tariffs and transshipment classifications', it said in response to queries from The Straits Times. ASME added that it is accelerating its internationalisation support to help smaller firms look beyond Singapore, which includes aggregating SMEs into overseas projects. But Mr Ang sees a silver lining: With the US tariffs expected to last, he believes Chinese investors will turn less opportunistic and more earnest about local integration. Chinese firms that tap into only their home country's supply chain and hire Chinese-speaking managers will find that they have reached a ceiling if they do not open up, he added. 'Chinese and Singaporean firms will partner more deeply to navigate compliance, build mutual value, and jointly access wider markets, making the quality and integration of the investment more significant,' he said. Mr Ang hopes policymakers will take a comprehensive relook at a range of policies, ranging from trade and tax rules, to SME competitiveness and regional integration. Rather than providing direct offsets to tariff impacts, ASME believes that support should focus on enabling diversification and long-term capital investment. To address immediate needs, targeted tax policy adjustments like enhanced capital allowances or greater deductibility can ease cash flow for companies needing to reinvest or relocate, it said. In the longer term, ASME said Singapore must review economic policies such as tax rules to align with the structural reconfiguration of global trade. Koda's Mr Koh hopes the Government will share financing and export risks with Singapore businesses. 'Especially for a manufacturer, sometimes you've got to give (credit) terms to your customer, and sometimes also to your supplier,' he added. 'So you're double financing front-end and back-end, and then you are very tight on your cash. If one of the big guys go under, they may drag you down.' Mr Koh's hands would also be tied if he wants to move capacity from one high-tariff jurisdiction to a lower-tariff one: 'If I want to increase my capacity in Malaysia, I need capital, I need to expand my factory.' Export insurance rates are also being scrutinised as insurers turn cautious, he said. Dr Deborah Elms, who heads trade policy at the Hinrich Foundation in Singapore, said continuing threats and changes to tariff timelines have made it difficult for companies to plan. She said: 'Some have accelerated production to ship products to the US while tariffs are lower. Others have stopped or postponed production until they have greater clarity. 'But uncertainty has a cost as well, including a lack of investment for new capacity.' Business are having to figure out how they are being penalised in respect to other nations in the same market. Dr Elms said: 'For clothing and textiles, for example, what matters is not just the rate given to Vietnam, but also the rates for Bangladesh, Cambodia and China. 'Any tariff is a challenge for firms, but one that hits all imports equally or nearly equally is not as damaging as one that hits your producers the hardest with the highest rates.' In Mr Koh's case, his American customers are showing him products that were made in China and asking if his firm – a specialist in dining sets – could make them in Vietnam. That should be good news, except that these customers are also asking him to split the costs of the tariffs. 'All the customers say, 'Let's share the tariff 50-50'. If the tariff is 10 per cent, the only way for us to win back the 5 per cent is to generate efficiency in our factory to cover up that 5 per cent. But manufacturing margins are not very fat,' he said. 'So, business is good, but profit may be an issue.' His customers – the retailers and distributors – will take the savings from his Vietnam imports to help cover the smaller profits in high-tariff countries such as China. 'The customers take from Peter and give it to Paul,' he surmised. While waiting for clarity on where tariffs will land, the best bet for business owners is to keep their balance sheet strong and reserve their gunpowder for when times get better, said Mr Koh.
Straits Times
2 hours ago
- Straits Times
Meta's Zuckerberg pledges hundreds of billions for AI data centres in superintelligence push
Find out what's new on ST website and app. Meta CEO Mark Zuckerberg touted the strength in the company's core advertising business to justify the massive spending. Mark Zuckerberg said on July 14 that Meta Platforms would spend hundreds of billions of dollars to build several massive AI data centres for superintelligence, intensifying his pursuit of a technology he has chased with a talent war for top engineers. The social media giant is among the large tech companies that have struck high-profile deals and doled out multi-million-dollar pay packages in recent months to fast-track work on machines that could outthink humans on many tasks. Its first multi-gigawatt data centre, dubbed Prometheus, is expected to come online in 2026, while another, called Hyperion, will be able to scale up to 5 gigawatts over the coming years, Mr Zuckerberg said in a post on his Threads social media platform. 'We're building multiple more titan clusters as well. Just one of these covers a significant part of the footprint of Manhattan,' the billionaire CEO said. He also pointed to a report from industry publication SemiAnalysis that Meta was on track to be the first AI lab to bring a gigawatt-plus supercluster online. Mr Zuckerberg touted the strength in the company's core advertising business to justify the massive spending amid investor concerns on whether the expenditure would pay off. 'We have the capital from our business to do this,' he said. Top stories Swipe. Select. Stay informed. Singapore HSA intensifies crackdown on vapes; young suspected Kpod peddlers nabbed in Bishan, Yishun Singapore Man charged over distributing nearly 3 tonnes of vapes in one day in Bishan, Ubi Avenue 3 Singapore Public healthcare institutions to record all Kpod cases, confiscate vapes: MOH, HSA Singapore Man allegedly attacks woman with knife at Kallang Wave Mall, to be charged with attempted murder Singapore Singapore boosts support for Timor-Leste as it prepares to join Asean Singapore UN aviation and maritime agencies pledge to collaborate to boost safety, tackle challenges Singapore High Court dismisses appeal of drink driver who killed one after treating Tampines road like racetrack Singapore 18 years' jail for woman who hacked adoptive father to death after tussle over Sengkang flat Meta shares were trading 1 per cent higher. The stock has risen more than 20 per cent so far this year. The company, which generated nearly US$165 billion (S$211 billion) in revenue last year, reorganised its AI efforts last month under a division called Superintelligence Labs after setbacks for its open-source Llama 4 model and key staff departures. It is betting that the division would generate new cash flows from the Meta AI app, image-to-video ad tools and smart glasses. Top members of the unit have considered abandoning Behemoth, the company's most powerful open-source AI model, in favour of developing a closed alternative, the New York Times reported separately on July 14. D.A. Davidson analyst Gil Luria said Meta was investing aggressively in AI as the technology has already boosted its ad business by allowing it to sell more ads and at higher prices. 'But at this scale, the investment is more oriented to the long-term competition to have the leading AI model, which could take time to materialise,' Mr Luria said. In recent weeks, Mr Zuckerberg has personally led an aggressive talent raid for the Meta Superintelligence Labs, which will be led by former Scale AI CEO Alexandr Wang and ex-GitHub chief Nat Friedman, after Meta invested US$14.3 billion in Scale. Meta had raised its 2025 capital expenditure to between US$64 billion and US$72 billion in April, aiming to bolster the company's position against rivals OpenAI and Google. REUTERS
Straits Times
3 hours ago
- Straits Times
US defence department awards up to $256 million in contracts to Google, Musk's xAI
Find out what's new on ST website and app. The contracts will help the defence department develop agentic AI workflows to address national security challenges. WASHINGTON - OpenAI, Alphabet Inc's Google, Anthropic and Mr Elon Musk's AI firm xAI have won contracts of up to US$200 million (S$256 million) each, aimed at scaling up adoption of advanced AI capabilities in the US Department of Defence, the government agency said on July 14. The contracts will enable the DoD to develop agentic AI workflows and use them to address critical national security challenges, the department's Chief Digital and Artificial Intelligence Office said. 'The adoption of AI is transforming the (DoD's) ability to support our warfighters and maintain strategic advantage over our adversaries,' Chief Digital and AI Officer Doug Matty said. US government agencies have been expanding their use of AI, driven by a White House order in April promoting adoption. President Donald Trump has also moved to soften regulation on the technology by revoking a 2023 Biden-era executive order, which sought to reduce AI risks through mandatory data disclosures. Separately on July 14, xAI announced a suite of its products called 'Grok for Government', making its advanced AI models – including its latest flagship Grok 4 – available to federal, local, state and national security customers. The Pentagon announced in June that OpenAI was awarded a US$200 million contract , saying the ChatGPT maker would 'develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains'. The contracts announced on July 14 deepen the ties between companies leading the AI race and US government operations, while addressing concerns around the need for competitive contracts for AI use in federal agencies. Top stories Swipe. Select. Stay informed. Singapore HSA intensifies crackdown on vapes; young suspected Kpod peddlers nabbed in Bishan, Yishun Singapore Man charged over distributing nearly 3 tonnes of vapes in one day in Bishan, Ubi Avenue 3 Singapore Public healthcare institutions to record all Kpod cases, confiscate vapes: MOH, HSA Singapore Man allegedly attacks woman with knife at Kallang Wave Mall, to be charged with attempted murder Singapore Singapore boosts support for Timor-Leste as it prepares to join Asean Singapore UN aviation and maritime agencies pledge to collaborate to boost safety, tackle challenges Singapore High Court dismisses appeal of drink driver who killed one after treating Tampines road like racetrack Singapore 18 years' jail for woman who hacked adoptive father to death after tussle over Sengkang flat In May, Democratic Senator Elizabeth Warren had urged DoD to ensure competitive AI contracting at a time when Mr Musk's Grok chatbot was gaining ground in the federal government. REUTERS
