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Interview With Vice Chairman And President

(*extracted from Annual Report 2018)

1. Where does the Company see itself along the logistics value chain and what kind of growth are you expecting for the South and Southeast region?

The ultimate goal of the Company remains clear – to become the leading integrated logistics player in the South and Southeast Asian region. We aim to provide comprehensive services across the entire logistics value chain that is capable of serving growing consumer demand as South and Southeast Asia continue its exponential economic growth.

The Asian Development Bank has projected economic growth of 7.2% in 2019, from 7.0% in 2018 for the South Asian countries.

The Southeast Asian region is also set to become the next major boom market for e-commerce in Asia-Pacific, which will drive expansion of the logistics sector. A joint research by Google and Singapore investment firm Temasek has estimated that the internet economy in Southeast Asia is expected to burgeon to more than S$200 billion within a decade.

ASEAN (Association of Southeast Asian Nations) has grown from strength to strength since its incorporation, forming economic linkages to various economies and cemented by free trade agreements, which bodes well for the volume of goods and services into the region. There are currently six Free Trade Agreements that are currently in force or signed with its partners such as Australia, New Zealand, China, India, Japan and Korea. In particular, the agreement with Hong Kong has come into force on 1 January 2019.

Singapore is also a prime location to conduct logistics business, with the top 25 global players and major logistics firms conducting operations in the country.

In addition, as part of Singapore's Smart Nation plan, the Smart Logistics initiative sets the path for the development of a cutting-edge logistics network in Singapore which will deliver significant cost reductions for logistics service providers. This will further reinforce Singapore's position as a leading logistics and supply chain management hub.

These are positive developments which augur well for our Company as we seek to expand our regional logistics presence through further acquisitions, leveraging on economies of scale and experiences of our Parent Company.

2. How does the Company intend to expand its capability and competitiveness of its logistics business in the upcoming years?

The Company will be actively seeking acquisition targets and form strategic partnerships in order to expand the Group's logistical presence.

While making an investment, we will take into consideration companies with proven track records and capabilities in providing synergies to our Group. Other factors such as the target Company's scalability, competitive advantages, portfolio of assets and market outreach will also be taken into consideration.

In order to maximize profitability and value from any acquisition, our team will work together with external professionals to perform analysis on target companies before recommending it to the Board. The Board also assesses and constructively challenges various proposals presented, overseeing the development of the Company's strategic direction.

As much as we wish to scale up our business and presence as quickly as possible, it is imperative that the Company take a calculated approach to effectively tackle challenges that it may face. We will strive to ensure that every investment is sustainable and will contribute positively to the Group's development and growth.

3. Moving forward, what will be the strategic direction for the Group?

The global economic growth for 2018 has been in line with forecasts and has recorded robust synchronized growth in 2017-2018. However, there have been various reports highlighting that expansion is becoming less even and risks to the economic outlook are mounting.

While Singapore's economy in 2018 has performed in line with growth forecasts, with a 3.3% Gross Domestic Product (GDP) growth, the 2019 growth rate is expected to slow to between 1.5-3.5%.

The International Monetary Fund (IMF)'s World Economic Outlook Report published in January 2019 projected growth of 3.5% for 2019. The IMF has downgraded its forecast for global growth on the back of trade concerns and weaker outlook for key advanced and emerging market economies. Further escalation and sustained trade actions are also likely to derail recovery and depress medium-term growth prospects.

Despite this, we believe that there will still be many opportunities for the logistics sector in the South and Southeast Asian region. The Company will continue to build on its strength, as well as the portfolio of the Parent Company and Group through strategic initiatives that will enable us to meet the ongoing challenges in this competitive landscape.

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