At the brink of global financial crisis in 2008, with a new CEO at the helm and complex market dynamics, Sembawang E & C wanted to reconsider its market strategy. Mr Richard Grosvenor, CEO Sembawang, appointed our partner, Mr S Maurya, to study the market and suggest a go-to market strategy. Sembawang had a track record of executing Singapore government's infrastruture and housing projects but after its divestment by the government, it had to compete with other market participants.

A detailed study of the major South East Asian markets enumerated that though Buildings was the largest segment, the competition in the space was intensive. Market entry barriers were low and local contractors were willing to undercut their margins to build project track record. Price was the single most differentiating criteria in the building construction space.

Major South East Asian countries were increasing their infrastructure spend to push their economies. Except for a few planned projects in Ports, Airports, rail and waste water treatment, major government budgetary allocation was for roads, tunnels and power plants. Most governments awarded Ports, Airports, LRT, water, power plants, O&G and petrochemical projects on the development basis to major US and European Developers who preferred construction contractors from their geographies to reduce their contractual risk.

O & G upstream and downstream investments picked up due to high crude oil prices. Singapore government finalised plans to play a significant role in the development and growth of the petrochemical industry on the Jurong island.

A detailed segmentation of the market and SWOT analysis of each segment, followed by a two days offsite workshop with the senior management led to two-fold market strategy to be executed in three phases. The first phase was to build on the standalone strengths of Sembawang by creating the niche as a developer of housing and civil infrastructure projects. It was agreed that Sembawang should move up the value chain and launch an Infrastructure fund to fund projects in partnership with other investors by reinvesting project construction margins in the project as the project developer. This would allow Sembawang to minimize investment on its own account and help build a project pipeline to sustain cash flows. Sembawang Securities was launched to give wings to the development strategy. The second phase was to bid for energy and petrochemical projects on EPC basis in JV with the partner companies and to build up experience to move to development space. The last phase was to work as a developer across all projects.

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