Noboru Oi
Group CEO
Fujitsu Asia

A SPIKE in oil prices will probably put upward pressure on costs and downward pressure on profits. This is generally due to the imbalance between the global supply and demand for black gold, with the latter currently far exceeding the former.

The supply-demand mismatch is beyond the control of local companies, and thus they will not be able to guard against oil-related cost components (jet fuel prices for airlines, for instance). Hence, to safeguard profitability, businesses will do well to adopt measures for reducing the cost components that they have control over.

For example, companies must improve various aspects of their business processes by streamlining operations, eliminating redundancies and other methods. They can achieve this by adopting creative IT solutions aligned with their overall business goals.

Regardless of the sector in which they operate, large local companies generally need robust and scalable data centres, secure and stable IT networks, front or back-end applications and other systems. With a sound understanding of their needs, Fujitsu Asia is able to provide customised solutions for companies in the local financial sector to improve their operational efficiencies.

Cost savings realised via successful IT implementations may balance or even exceed cost increases brought about by high oil prices. Not only that, companies will also be able to enjoy gains in operational efficiencies regardless of what oil prices are. Therefore, the current high oil prices serve as a wake-up call for companies to examine every aspect of their business operations, and identify ways of doing things better, cheaper and faster. And that is a good thing!

Brenton Smith
Managing Director, Asia South
CA

RISING energy prices impact the software industry in terms of development cost. Software development requires time and rigorous quality testing on various platforms, all of which need power. As in other industries, this hurts the bottom line by increasing business cost.

Firms should set policies for staff to turn off unused electrical appliances, or like CA, deploy power management software that can monitor and shut down idle computing equipment. They should also use renewable energy sources where feasible, deploy video-conferencing solutions in branch offices to cut down on business travel, install intelligent lighting and air-conditioning control systems, improve building insulation, and encourage recycling to reduce the need to purchase new materials.

R Theyvendran
Chairman/Managing Director
Stamford Media International Group

SINCE oil is a basic commodity, higher energy costs inevitably translate into higher cost of doing business. Even with increased income, surplus and profit margins are unavoidably affected. Businesses must realise that when a commodity is absolutely vital for the economy, then the ordinary demand and supply principle must be re-examined.

As a nation with no natural resources, our entire energy needs are imported. To some extent, businesses can be prudent and reduce consumption. On an individual level, we can encourage our employees to adopt ways to conserve energy - switching off lights when not needed is one simple example. However, on an organisational level, we need to look at more substantive savings. As an example, the use of solar panels, which can be retrofitted onto existing buildings to provide another source of electricity, could be given further thought.

In the short term, the industry and nations either must think of oil banks to reserve energy so that the economy can continue to function even if there is a catastrophic increase in energy prices - and in the long term, explore alternative forms of energy, like biofuel and even nuclear energy.

Ravi Rajendran
General Manager, Asean
Hitachi Data Systems

WHEN you consider how it is estimated that a data centre with 500 servers will use enough electricity in a month to power 84,000 homes annually, this truly becomes a problem at a time where oil prices are rising drastically.

Hitachi Data Systems helps customers reduce their data centre power, cooling and facilities costs by implementing more environmentally attuned data centres that utilise space and storage more efficiently with the help of our storage virtualisation technologies. We also design, manufacture and support environment-friendly storage infrastructure throughout their entire life cycle.

Tom Cheong
Managing Director, Singapore and Brunei
Cisco

CISCO has developed a technology infrastructure that enables our employees to work equally effectively, in or out of the office. This served the company well during the Sars outbreak and now as we see oil and energy prices start to spiral, it's serving us well again. This initiative to implement collaborative technology tools throughout the company is also tied into our green initiatives. Cisco committed under the Clinton Global Initiative to reduce carbon emissions from corporate air travel by 10 per cent. We also invested US$22.2 million in our own collaboration technologies such as TelePresence and unified communications to enable our employees to reduce their air travel.

In FY 2007, Cisco successfully reduced its air travel by 10 per cent and a large factor for this was our ability to hold productive remote meetings via TelePresence. In that same financial year, our employees held 25,000 meetings via our TelePresence units which are located in around 60 cities where Cisco has an office.

We are also piloting initiatives in San Francisco, Seoul and Amsterdam which make use of technology in urban infrastructure and management systems to help those cities reduce energy consumption and lower greenhouse gas emissions. The project in Amsterdam is expected to reduce carbon dioxide emissions by 76,000 tonnes over five years.

Technology can definitely be used to save companies' money, especially with the rapid increase in oil and energy prices, but in the larger scheme of things, it can help in the fight against global warming.

Ng Kong Yeam
Group Executive Chairman
Sino-America Tours Corporation

THE rapid increase of oil and energy prices will definitely affect travel and tour businesses as air fares will rise significantly. It will also affect economies as inflation will take place.

Luckily, the government imposes a high tax on petroleum. It can thus reduce or even suspend the tax to ensure the economy's growth. The government policy should be to develop solar energy businesses as well as businesses that make products to lessen energy consumption.

Valerie Wong
General Manager
Rolls Royce Motor Cars Singapore

WE have seen car sales rise even with the rising cost of fuel. Human nature being what it is, there will be a process of adaptation - using lean techniques, hedging or reassessment of priorities. European motorists, for example, typically pay 1.47 euros a litre (S$3.11), and are living with it. I think it is also an opportunity for businesses to review how they can target new opportunities. As energy costs rise, there will be a shift in the balance of wealth to the oil and gas-producing countries and, therefore, customer purchasing power.

Gary Harvey
CEO
Wealth Management Asia, ipac

AS A service industry, we are affected by the secondary effect of the oil price change. In fact, the rise in oil price is less significant than the change in commercial rents in Singapore over the last few years. The true focus for companies now should be on efficiency issues and managing costs.

On the other hand, we should also view this issue from the perspective of clients in the investment business. The market has seen many different trends over the years but the fundamentals for long-term investing remain the same. It is critical that investors focus on the long term rather than the short term. If the client has invested in a portfolio of quality, well-diversified assets for the long term, then the recent news needs to be heard but not acted on.

Goh Chong Theng
General Manager, Singapore Branch
Rabobank International

MANY industrial products such as jet fuel, petrochemicals and plastics are derived from crude oil. And fossil fuels such as petroleum and natural gas are needed to generate electricity, treated water and other utilities. Hence, higher oil prices will increase supply costs of global industrial output, although the adverse effects are somewhat mitigated by the depreciation of the US dollar.

Food prices will also rise because agricultural produce is increasingly being diverted to energy production instead of food consumption. For example, corn and sugar cane crops are now converted to bioethanol while palm oil is now used to manufacture biodiesel.

From Rabobank's commercial standpoint, we are a global banker to many energy companies and agricultural producers, who are all performing very well because of a global commodity shortage. In addition, the quantum of financing for commodities in general has increased manifold and this has generally been good for our business.

From a socio-economic perspective, the double  whammy of rising energy and food costs will affect every nation on the earth. These inflationary pressures will affect poorer countries more than richer ones, because energy and food expenditure typically account for a smaller proportion of overall consumption levels in developed nations relative to the Third World.

Being a developed nation, Singapore will experience rising inflation. In fact, Minister for Trade and Industry Lim Hng Kiang said in Parliament recently that inflation is expected to continue to rise until the second half of next year. Rising living and business costs could form an inflationary cycle - increased costs force workers to demand higher wages and companies to impose price hikes, which raises costs even further.

As long as companies in Singapore can realise productivity gains that keep pace with cost increases, our economy will continue to be resilient. And as long as expenses are kept under control, with reasonable increases passed on to customers, we should be able to keep business and living costs manageable.

Mike Sim
Executive Chairman/CEO
Sinwa Limited

CONVENTIONAL wisdom holds that high oil prices are bad for business. But why should businesses be hindered by such conventional thinking? I think high oil prices might actually present great opportunities for some industries and companies.

Due to the current high prices, oil and gas exploration activities are intensifying all around the world. Therefore, if you can re-engineer or diversify your business to tap into this boom, high oil prices can be an opportunity instead of a threat.

This is what Sinwa has done since late last year. So far, we have established two joint ventures with separate partners, one to build and subsequently charter a jack-up rig and another to convert and subsequently charter a seismic vessel.

Given that oil prices are currently so high, we will continue with our strategy of seeking opportunities in the offshore sector. For example, in Western Australia we are focused on the oil and gas sector because exploration activity in that part of the world has increased rapidly in recent times. To give ourselves room for future expansion, we have enlarged our footprint and service capabilities in Western Australia by acquiring land for building a modern warehousing and logistics complex.

This is what I mean by not being bound by conventional wisdom - the trick to maintaining your business growth lies in identifying new business opportunities thrown up by the external landscape - and capitalise on them.

Liu Chunlin
Managing Director
K&C Protective Technologies

TO SOME extent, businesses are always expecting the unexpected. However, the recent oil and energy price surges bring back the spectre of the 1970s' energy crisis.

Huge and sudden price surges create havoc in the market and inflict deep cuts in the economy. Contracts committed earlier suddenly seem untenable and will place tremendous pressures on a company, which has other things like a manpower shortage to worry about. Marginal companies will have much to fear.

For us, it will mean greater uncertainty and inflation, as the cost of doing business will rise in tandem. In many cases customers expect you to absorb increased costs, but where it becomes unsustainable, adjusted prices will be reflected in new contracts. Companies certainly hope to see some stability as they otherwise become very conservative with large or long duration contracts.

Though everyone watches the oil and energy market with anxiety, for Singapore and for businesses here, we can only do what we have more control over. Namely, not to take our eyes off things like creating new market share, innovation, quality service, cost management, continuing staff development and productivity gains.

Berthold Trenkel
Chief Operating Officer, Asia-Pacific
Carlson Wagonlit Travel

IN THE travel industry it has become a common practice to pass at least part of the rise in fuel price to the traveller via fuel surcharges or increased air fares. While this is impacting the leisure side of the business, where consumers are more price sensitive, the corporate travel world has proven to be more resilient. The growing global economy is still driving demand for travel. Hence the CFO's attention has switched to managing the overall travel budget via effective travel management, the specialisation of our company. Clients are discovering how they can get more bang for the buck - be it via corporate air deals, travel programme compliance or better control of their meetings and events spend. All in all, a good thing - both for our clients and for us.

Teng Yeow Heng Michael
Managing Director
TR Formac

RISING oil and energy prices are not healthy for my industry. We are a manufacturer and a huge consumer of energy. The unrelenting increase of oil prices will also increase costs of transportation and raw materials. As it is difficult to pass on these costs to customers, our profit margins may be eroded.

We have to cope with increasing energy costs by further improving our production productivity, cutting other overheads, reducing waste and working smarter.

However, this scenario is not new to us. My company has thrived through several energy crunches before and come out stronger. In the past, many of our weaker competitors closed down as they were unable to cope with such hard times. Our market share increased because many of our competitors were eliminated. It is hard times like this that will differentiate us from the rest of the pack.