Academic journal article Southeast Asian Affairs

Progress and Trends in Some Major GLCs

Academic journal article Southeast Asian Affairs

Progress and Trends in Some Major GLCs

Article excerpt

The government has professed it can no longer "pick winners", at best only encourage or create the right environment for the private sector to pick them. Yet, has enough changed at the core of Singapore Inc. as in Singtel, SIA, Natsteel, Keppel, and NOL? Since 1993, GLCs have gone regional to tap market share and globalized through M&As in the United States in particular to tap technology.

In the regionalization drive it would be worthwhile to look at Suzhou Industrial Park (SIP) project launched in February 1994 as a Singapore-China government co-operation project. The 70-square-kilometre town was estimated to cost US$20 billion (S$34.5 billion) to build, create 360,000 jobs, and provide housing for 600,000 when completed in twenty years. China-Singapore Suzhou Industrial Park Development (CSSD) was 65 per cent owned by a Singapore-led consortium, Singapore-Suzhou Township Development (SSTD, comprising Centrepoint Prop, CityDev, DBS Land, EDB Investments, Keppel Corp, NTUC Co-operatives, Pidemco Land, SembCorp, SingLand, STIC, THL, and Wing Tai) and 35 per cent by the Chinese. (See Table 3 for investments committed as at July 1999.) Singapore subsequently cut its stake from 65 to 35 per cent, redefining the SIP objective to focus on completing the first 8 square kilometres as a reference model for the development under Chinese management of the rest of the 70-square-kilometre site. It handed over the management of the park in January 2001 though software transfer in training Chinese officials was to continue as long as China finds it useful. The problems in the co-operation showed a cultural and political economy gap between the two countries. Singapore's unhappiness was mainly over the conflict between the SIP and rival Suzhou New District (SND) industrial park set up in 1990 and owned by the municipal government. Essentially, the SND could duplicate whatever the Chinese learnt from the SIP and make a more attractive offer to investors in terms of lower land rates.

TABLE 3

Investment Committed in Suzhou Township Project as at 1 July 1999

SOURCE: Business Times , 4 August 1999.

Brokered at the highest level from 1992 between Lee Kuan Yew and Deng Xiaoping who admired Singapore's economic prosperity combined with good social order and good management, the SIP was Singapore's flagship project in China as well as of its regionalization programme. For Singapore, the experience was more than wounded pride as the experiment also affected the Republic's credibility to be able to intermediate, broker and form partnerships with other foreign investors interested in China under its regionalization policy. European businessmen, for instance, had been wooed to take advantage of Singapore's regionalization efforts on these grounds.

Singapore cannot know China as well as Taiwan and Hong Kong do. Top management may not have understood the Chinese market place, erroneously assuming that there was no significant cultural difference. More flexible than GLCs, smaller private firms may do better: as entrepreneurial owners they invest more energy and time, give their personal stake, and seek ways to work the system. This raised the question whether Singapore Inc. technocrats and businessmen are all that savvy on less sheltered and "sanitized" terrain. Chinese rules and regulations cannot be as transparent and orderly as those in Singapore. Lee Hsien Loong conceded Suzhou was more ambitious than thought, but that the SIP has a "reasonable" chance of becoming profitable in the medium term.18

Other GLC regionalization efforts have not been easy either. Singtel has stakes in Thailand, India, Philippines and Taiwan, but failed in its bids for Cable & Wireless Hong Kong Telecom (HKT) and Malaysia's Time Engineering in March and May 2000 respectively. Both setbacks were due to political, not economic or business, reasons. Singtel is perceived as state-influenced, with some 78 per cent government ownership and Lee Hsien Yang as CEO and president. …

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