SK Group has decided to set up an investment company in Singapore that would focus on investing in local startups and high-growth projects in Southeast Asian countries.
According to SK Group on July 31, SK C&C Co., SK Innovation Co., SK Telecom Co., SK Hynix Inc. and SK E&S Co. have recently decided to invest a total of US$500 million (560 billion won) – US$100 million (112 billion won) from each company – to establish “SK South East Asia Investment” in Singapore.
This came after the global strategy meeting chaired by group chairman Chey Tae-won in Kuala Lumpur, Malaysia, earlier this year. The group’s top officials, including Cho Dae-sik, chairman of the SUPEX Council, the top decision-making council of SK Group, attended the meeting. At the meeting, participants noted that emerging countries in Southeast Asia aggressively promoted industries related to the fourth industrial revolution by attracting foreign investment. So they decided to set up a regional head office (RHO) for Southeast Asia that would take care of the group’s businesses in the region without depending on the group headquarters.
However, SK Group said that the planned investment company is not the proposed RHO in Southeast Asia. An official from the group said, “We haven’t decided yet whether we will let the investment subsidiary serve as an RHO or create another firm. We are to launch the investment subsidiary in Singapore because Singapore offers the best environment to establish a subsidiary.”
SK South East Asia Investment will be located in Singapore but the actual operation organization can be located in other countries such as Malaysia or Vietnam. It will focus on promoting local startups and seeking out a new growth engine as well as managing the group’s current flagship businesses.
With the establishment of the Southeast Asian investment subsidiary, SK Group’s “Southeast Asia Insider” strategy is also expected to gain momentum. The group has been considering Southeast Asia as an alternative market to China but it is not running businesses in Southeast Asian areas yet. The headquarters of SK Trading International Co., a subsidiary of SK Innovation, is situated in Singapore, while the subsidiaries of SK Networks Co. are established in Indonesia and Malaysia. SK Global Chemical Co. and SK Shipping Co. also have their subsidiaries in Singapore. In particular, SK Innovation runs the exploration and production (E&P) business in Vietnam and it recently participated in the stake sale by Vietnam’s state-run firm PetroVietnam Oil Corporation (PVOIL).
However, some in the business community said SK Group might need to adjust the speed of its penetration into Southeast Asia as the situations in the Southeast Asian region are now rapidly changing. In fact, Malaysia has recently underwent a change of government for the first time in 61 years. Accordingly, it has become riskier for the group to start new businesses in Malaysia.