Amazon flies high in the Internet cloud

Amazon is widely known for its prowess as an online retail colossus, but is also thriving when it comes to sending business aloft in the Internet cloud.

PHOTO: AFP

NOV 12, 20157:01 AM

[SAN FRANCISCO] Amazon is widely known for its prowess as an online retail colossus, but is also thriving when it comes to sending business aloft in the Internet cloud.

Cloud computing is among the fashionable and fast-growing technology trends, with familiar services ranging from free email to streaming Netflix television reliant on the concept.

Internet industry giant's have long been plowing cash into massive data centers and green energy sources to power cloud computing that essentially lets them use massive computing power to provide data and services to Internet-linked devices.

While titans including Apple, Google, and Facebook have resources and reasons to build their own data centers, it is more common for companies to spare themselves the cost and trouble by "renting" server space from cloud computing operations such as Amazon Web Services.

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Ranks of cloud computing rivals range from specialty firms such as Rackspace to century-old technology veteran IBM, which is working to differentiate its offering by mixing in the smarts of its Jeopardy game winning Watson artificial intelligence.

"There is a huge race now to dominate what is called the public cloud," said Forrester analyst Dave Bartoletti.

"It is these giant data centres where any company can run applications and just rent infrastructure." Amazon "pretty much invented this market," getting into the cloud computing business about a decade ago, according to the analyst.

Amazon has poured money into building data centres, and surprised the market this year with word that its AWS subsidiary had a profit margin that soared during the first nine months of this year while revenue leapt 70 per cent to US$5.5 billion.

Analysts believe that AWS handles about half the world's public cloud business.

"AWS made the market its own" by the time rivals stepped in to challenge the company, according to Synergy Research Group analyst John Dinsdale.

"Importantly, AWS has remained extremely aggressive in investing in its network; new service development, and pricing so that it has stayed ahead of its competition," Mr Dinsdale told AFP.

While building up cloud computing infrastructure, AWS also ramped offerings with capabilities such as database management or help designing applications for the hot mobile market.

"Amazon has moved from just being a threat to people who run their own data centers to threatening any company that makes any type of technology, whether that's Oracle or IBM or HP or Dell," said Mr Bartoletti.

The heads of tech industry powerhouses Microsoft, Oracle, and Hewlett Packard in recent weeks have openly nodded to Amazon's prowess in the cloud.

Microsoft chief Satya Nadella cited Amazon as its only rival in the cloud that is innovating at a massive scale.

Oracle founder Larry Ellison took aim at Amazon as its adversary instead of historical rivals like IBM and SAP.

HP boss Meg Whitman described Amazon as being "too far ahead" in the booming sector of cloud services.

Forrester expects the cloud to remain on fire for at least five years, with growth rates topping 30 per cent.

Many companies are likely to grab for a piece of the cloud's gold lining, but few will be able to stand up against Amazon, according to analysts.

The strongest challenge at the moment is Microsoft, which has an Azure division devoted to the cloud.

Nadella has made a priority of software, services and platforms hosted in the cloud. Microsoft hoped to get a foot up by building on its relationships with businesses who have long relied on the US firm's software.

Further behind in the race to the cloud is Google, which has a formidable array of data centers around the world but they are known more for what they offer to consumers than businesses.

IBM is also striving to catch up, investing heavily in the cloud but not yet gaining enough ground to offset losses in sectors where the century-old US firm once flourished.

Analyst Bartoletti predicted that the cloud market would eventually be ruled by three to five global actors, with a secondary market taking shape with small local providers.

"It is tough to see any meaningful challengers to the big four at the moment," said analyst Dinsdale.

"For sure, there will be a lot of consolidation."

AFP

    
 

Islamic finance can promote stability: IMF chief

The head of the International Monetary Fund, Christine Lagarde, delivers a speech during the international conference on Islamic finance, in Kuwait City on Nov 11, 2015. 

PHOTO: AFP

NOV 12, 20157:19 AM

[KUWAIT CITY] The fast growing, Sharia-compliant Islamic finance industry has the potential to promote financial stability because of its risk-sharing and asset-backed features, International Monetary Fund managing director Christine Lagarde said Wednesday.

"Islamic finance has, in principle, the potential to promote financial stability because its risk-sharing feature reduces leverage and its financing is asset-backed and thus fully collateralized," Ms Lagarde told an Islamic finance conference in Kuwait.

Islamic banks also offer profit-sharing and loss-bearing accounts that can help mitigate losses and contagion in the event of banking sector distress, she said.

"This leads... to higher total loss-absorbing capital, one of the key objectives of the new global regulatory reform," Ms Lagarde told the one-day event organised by the IMF and Central Bank of Kuwait.

But she said that for the industry to unlock its full potential, it must expand its customer base, harmonise standards and improve regulatory frameworks.

Ms Lagarde later told a press conference the IMF will increase its involvement in the Islamic finance industry by providing more bilateral surveillance and analytical help.

The Islamic finance industry, which bans speculation and interest, still lacks effective regulatory and supervisory frameworks catering to its unique risks.

It also bans dealing in products with excessive uncertainty, gambling, short sales and financing prohibited activities considered harmful to society.

Ms Lagarde said Islamic assets have crossed the US$2 trillion mark and has the potential to grow much larger.

Around 40 million of the world's 1.6 billion Muslims are clients of the Islamic finance industry, which has surged in popularity since its niche market days of the early 1970s.

Kuwait's Central Bank governor Mohammad al-Hashel said Islamic finance can offer a system based on strong principles and social justice.

"A system, which if implemented in its true spirit, will bolster growth, create jobs, reduce poverty and address inequality," Mr Hashel said.

He said the Islamic system channels credit into productive investments that are socially responsible and not in wasteful speculative activity.

The objective is to create a system that is "ethically right, socially just, financially stable and economically productive", Mr Hashel said.

Officials and experts, however, acknowledged that the industry still faces tough hurdles, mainly setting consistent regulations for all markets.

The Jeddah-based Islamic Development Bank president, Ahmad Mohamed Ali, said he believes the main obstacle is the failure to create a mega Islamic bank and the lack of sufficient tools to manage liquidity effectively.

AFP

    
 

India's Modi eyes trade deals, show of strength on UK visit

India's Prime Minister Narendra Modi addresses a rally in a cricket stadium in Srinagar in this Nov 7, 2015 file photo. 

PHOTO: REUTERS

NOV 12, 20158:13 AM

[LONDON] Indian Prime Minister Narendra Modi begins a visit to Britain on Thursday that he hopes will yield trade deals worth billions of dollars and a boost to his authority after a damaging electoral failure back home.

Bruised by his Bharatiya Janata Party's defeat in an election in populous Bihar state last Sunday after a campaign in which he played a prominent part, Mr Modi is seeking to regain the political initiative by increasing investment and growth.

Diplomats say deals worth 8-12 billion pounds (S$17-26 billion) could be signed during his visit to London, with the Indian leader keen to buy 20 more BAE Systems Hawk trainer aircraft to be made in Bengaluru.

The emotional high point of the visit is likely to be a mass rally at Wembley Stadium on Friday during which Modi will address some 60,000 supporters from the Indian diaspora in Britain, which numbers 1.5 million.

Mr Modi, paying the first visit to Britain by an Indian prime minister since 2006, is expected to receive a rapturous welcome in scenes that allies hope will reassert his authority and standing on the world stage after the blow in Bihar.

However, protests were also being planned by various groups opposed to Mr Modi and to what they see as his party's aggressive Hindu nationalist agenda. Mr Modi has been widely criticised in the British press over the same issue.

On Thursday, Mr Modi will meet his British counterpart David Cameron and the pair will hold a joint news conference.

He will then address the British parliament, before heading to the Guildhall, a historic building in the heart of the City of London financial district, where he will give a speech to a business audience.

Mr Cameron's office said Britain would seek to promote London as a centre for offshore rupee bonds and Indian companies were expected to announce plans to issue debt denominated in their own currency.

REUTERS

    
 

G20 fails to deliver on anti-graft pledges: Transparency International

A view of skyscrapers in the City of London financial district. 

PHOTO: BLOOMBERG

NOV 12, 20158:11 AM

[ISTANBUL] World powers have failed to deliver on bold pledges to close down corporate loopholes that allow the corrupt to easily hide their ill-gotten gains, Transparency International said on Thursday.

It said in a report that up to US$2 trillion (S$2.84 trillion) was laundered each year, often through complex webs of anonymous entities across multiple jurisdictions, and said the Group of 20 top industrial economies must do more to eradicate the legal structures that made it possible.

The report was issued shortly before a G20 summit in Turkey, a year on from their gathering in Australia where leaders committed to improving transparency to help prevent the use of shell companies for illegal purposes.

But Transparency said that of G20 countries, only Britain was "actively working to make it harder for the corrupt to hide their cash" while the world's biggest economies the United States and China were among the worst performers.

"Pick any major corruption scandal in recent history - Petrobras, FIFA, Ukraine's Viktor Yanukovych - and you will find a secret company was used to pay a bribe, shift and hide stolen money, or buy luxury real estate in places like London and New York," said Transparency's managing director Cobus de Swardt.

Anti-graft advocates have repeatedly called for the adoption of tougher corporate disclosure requirements by G20 countries, which represent 85 per cent of the global economy.

At the 2014 summit, G20 leaders vowed to clamp down on corruption, tax evasion and money laundering by endorsing beneficial ownership principles that Transparency said should have led to the dismantling of legal structures that allow anonymous companies or trusts to transfer and hide money often stolen through corruption.

"It makes no sense that this gaping loophole for the corrupt remains open," de Swardt said in a statement.

Transparency called for governments to set up a central public register containing information on beneficial ownership and to tighten up corporate oversight on those aiding the corrupt.

Currently, it said, only Britain and India now require companies to record information about their real owners, while Brazil and South Africa had not even adopted a legal definition of beneficial ownership.

In eight countries, it said, including the leading financial centres of New York, Tokyo, Shanghai and Sydney, banks can complete transactions even if they do not know the identity of the true person behind the funds.

And it said that properties worth hundreds of billions of dollars in London and New York have secret owners, because in seven G20 nations estate agents are not required to identify the true buyers and sellers.

Turkey has said that the fight against corruption in the public and private sector and tax evasion would be on the agenda at the November 15-16 summit in the Mediterranean resort of Antalya although the gathering is set to be dominated by the Syrian conflict and the migrant crisis.

REUTERS

    
 

Survey among SMEs points to growth plateau, slimmer profits

But these businesses have taken decisive steps to stay sharp, and turned to technology and innovation: DP Info

By

Mindy Tantanmindy@sph.com.sg@MindyTanBT

Mr Ho said the survey figures show a fall in number of SMEs that have been in business for 10 years or less, and this needs to be examined.

 Muted outlook

NOV 12, 20155:50 AM

Singapore

JUST over half of Singapore's small and medium-sized enterprises (SMEs), 53 per cent, have hit a plateau in their growth or even registered negative turnover, the latest SME Development Survey has found.

Add to this the fact that the number of SMEs with high-risk credit ratings is nearing the halfway mark. DP Information noted that 46 per cent of the SMEs surveyed were given a "high-risk" rating , given their struggles with the the slowing economy and cost pressures.

The profit margins of these businesses has shrunken; 35 per cent of them - eight percentage points more than a year ago - reported profit margins of between 0 and 5 per cent.

However, fewer companies had negative profit margins - 24 per cent, compared to 28 per cent a year ago; 6 per cent reported negative turnover growth, down a shade from 7 per cent in 2014.

Forty seven per cent of the survey respondents, one of the highest in recent history, reported zero turnover growth; the figure was 40 per cent last year.

Fewer SMEs - 9 per cent vs 12 per cent a year ago - are in an accelerated stage of development, defined as an increase in annual turnover of 10 per cent or more.

A record of 2,847 responses were received from SMEs in the survey, conducted amid a muted outlook largely brought on by global headwinds and restructuring on the local front.

Singapore Business Federation's chief executive officer Ho Meng Kit said that internationalisation remains an important growth driver for SMEs, and that there is scope for government and trade associations and chambers to introduce the opportunities made available through the Asean Economic Community (AEC), the Trans-Pacific Partnership and other free-trade agreements.

But while the survey found that more SMEs are doing business overseas - 54 per cent are generating revenue outside Singapore, up from 50 per cent last year - it also found that fewer are generating the bulk of their revenue from such overseas activities. The proportion of overseas revenue generated by SMEs has been falling since 2013.

The key challenges highlighted included competition (cited by 41 per cent of respondents), lack of knowledge and information (16 per cent), and currency fluctuations (11 per cent).

Mr Ho noted a separate area of concern - a fall in the proportion of younger SMEs. Only 10 per cent of the responses came from businesses that have been around for a decade or less, compared to 37 per cent in 2012. As SMEs go through a "make-or-break period" between their third and their 10th year, there is a need to analyse this drop, he said.

Despite the subdued outlook, DP Information's chief operating officer Lincoln Teo stressed that it is not a "doom-and-gloom" situation, and that SMEs are showing great resilience and making changes that will stand them in good stead down the road.

Indeed, these businesses have become more decisive, and have clearer strategies on what they must do to stay competitive. These include improving customer service (26 per cent), raising productivity through IT (21 per cent) and expanding their range of products and services (20 per cent).

This is a definitive step forward from last year, when about half (51 per cent) of the SMEs surveyed said their main business strategy was to rethink their business model.

This year, a record 68 per cent of SMEs had invested in their in-house technology and innovation capabilities. This is on top of the 64 per cent which had made investments last year, as SMEs turned to technology and innovation to bolster their competitiveness and sustainability, while reducing their dependency on manpower.

Andrew Khaw, senior director of productivity growth through information and communications technology (ICT) at the Infocomm Development Authority of Singapore (IDA), said companies are starting to take new approaches to address manpower constraints and increasing competition.

"In particular, in a shift from traditional manpower optimisation, 47 per cent of SMEs have deployed ICT to overcome their labour shortages. Through the use of specialised tools and software, two-fifths of SMEs are also harnessing their business data to increase their competitiveness."

Notably, although the difficulty in hiring staff and higher manpower costs continue to dominate SMEs' list of business concerns, fewer SMEs cited these concerns than in the 2014 survey.

Difficulty in hiring staff fell 8 percentage points to 41 per cent in this year's survey; high manpower costs fell 9 percentage points to 39 per cent. But the uncertain global economic environment weighed more heavily on companies, climbing 6 percentage points from 23 per cent to 29 per cent.

DP Information's Mr Teo said: "Technology remains the key to SMEs unlocking greater productivity gains and offsetting the challenge of a tight labour market. Investment in technology is making our SMEs lean, efficient, and more competitive."