Competing and Collaborating Economically in SOUTH and East Asia (2001)

CPDS Home Contact East Asia in Competing Civilizations

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Singaporean Investment has led to controversy

Resistance to large Singaporean investments in Australia's airline and telecommunication industries is voiced on the basis of Singapore's human rights record. It was said that the way Singapore did business would not be acceptable to the majority of Australians. Singapore's Government was seen as both intrusive and overseeing - and its approach to governing was in total conflict with Australia. Another business leader expressed concern about Australia selling its assets to the Singaporean Government (Elliot G. 'Stokes lashes Singapore', Australian, 22/6/01)

Singaporean officials insist that there is no conspiracy between government and the companies it owns (which make up 60% of Singapore's economy). But few outsiders believe them. The relationship between government and companies is symbiotic. This cozy relationship starts with the premier political family. A senior Minister is chairman of a secretive Government Investment Corporation. His son runs the quasi central bank and is deputy prime Minister - and the latter's wife runs Singapore technologies that controls the nations land bank, makes weapons and controls a major telephone carrier. The number one telephone carrier (Singtel) is owned by the other state investment company which is run by the second son of the premier family. Singtel's chairman is soon to chair Singapore Airlines. The boards of both companies are littered with current and ex public servants - including the former head of Singapore's secret police, and the head of Singapore's defense force. Such linkages would be seen as conflict of interest in Australia - but in Singapore it is the system (Ellis E. 'In the island state, many hands make elite work', Australian, 22/6/01)

"The bids by Singapore's state-owned airline and telecommunications company's for Air New Zealand and .. Optus are as novel for Singapore as they are for Australia. Singapore's government-owned companies have never ventured abroad before and there is no telling how they will perform". Singapore has become prosperous through a Faustian bargain. Singaporeans accepted authoritarian government, a servile media and punishing compulsory savings - and have received investment taking advantage of the island's location for serving Asia. Compulsory savings were directed into infrastructure. Singapore rates as one of the most successful trading nations, but rates poorly on freedom. But the strategy of providing a secure base for foreign investment is no longer adequate for Singapore (eg it can no longer be a low cost base for manufacturing). Singapore's government owned companies have benefited from the same advantages as foreign investors in Singapore (ie well trained and compliant workers). But it can be difficult to get decisions made. But this has not been a problem when those government owned companies enjoyed the benefits of monopoly. These companies are run by well (US) educated elites without problems of cronyism that have emerged elsewhere in Asia. But there are few corporate governance practices. If Singapore attempts to impose command and control traditions on Air New Zealand and Optus will they be able to match their competitors for speed and quality of decisions? Singapore has been said to be 'micro-free' which may explain why its companies have first tried to expand abroad into Australia's oligopololistic infrastructure markets - where they will face little competition (Uren D. 'Can microbe free Singapore resist infection', Weekend Australian, 23-24/6/01)

"This week has seen the worst outbreak of corporate Hansonism in a disgusting and self interested campaign led by corporate figures who should know better" (related to Singapore Airlines part ownership of Air New Zealand and SingTel's bid for Optus). It had been said that the way Singapore did business would not be acceptable to the majority of Australians. "These attacks are nothing but Hansonism moved to the top end of town". Asian diplomats are astonished that Singapore is singled out when US and British investment in Australia is much greater. Also Singapore and Australia are about to enter into a free trade agreement. Singapore is also a military partner under the Five Power Defense Arrangements. Singapore is also our sixth largest export market. The argument that some of Singapore's companies are majority government owned is of no force. Singapore is the least corrupt society in SE Asia. Its government linked corporations are corporatised commercial entities, not government departments (Sheridan G' 'Corporate Hansonism', Weekend Australian, 23-24/6/01)

"(Singapore's Economic Development Board's website says) The Singapore Unlimited vision articulates Singapore's aspiration to become a first league developed nation and its strategies to enhance its economic activities in an integrated holistic approach to systems. Through the cooperative support of all parties .... stakeholders from Singapore inc, working together like entities in a large corporation, each responsible for a specific aspect of Singapore's value chain ... to support and add value to our business partners. ... (Australia) might deride branch office economics, but Singapore has made an economic philosophy out of it. .... In Singapore joining the private sector doesn't necessarily mean leaving public service. ...(Singapore's Government) is now exhorting Corporate Singapore to go forth and multiply beyond the island's cosy business community that has been described as microbe-free.   ... (Thus) it becomes clearer why famously micro-managed Singapore wants to pick key Australian assets. SE Asia is hardly a secure investment right now .. but Australia ... has been since the 1997-98 financial crisis. ... It is not surprising then that Singapore Inc is extending its reach into Australia with component companies taking out key infrastructure assets ... this push offshore comes as Singapore attempts to deregulate its business sector" (Ellis E. 'Sussing out Singapore', Weekend Australian, 28-29/7/01)

Increasing Asian engagement has been suggested as critical to Australia

Many of Australia's big companies are moving head office and management functions overseas (through dual listings, moving top management, outright relocation) because they earn much of their income offshore, and Australian capital and product markets are small. This trend has already swept new Zealand - and though Australia is bigger it is still only 1.2% of the global economy and it is close to a risk which can bring slower growth, fewer job opportunities and less domestic economic control. Rapid economic integration with Asia is thus imperative. The companies moving offshore do most of their business in Europe and North America. If they did most business in Asia they would be much more likely to remain. Australia can either be a powerhouse in Asia or a branch of Europe and North America. (Tanner L. 'Halt our drift into the second division', Australian, 13/3/01).

  • there is nothing new or unique for Australia about East Asian investment, and involvement in the Australian economy. Japan has been a major investor - especially in the 1970s and 1980s - and especially in resource related projects (and in real estate for a one time). Furthermore a substantial number of Australia's largest exporters are Japanese trading companies;
  • what is new about current Singaporean investment may be its engagement in mainstream business areas in which Australian firms have established operations;
  • there has often been (probably justified) concern about Australia's ability to benefit economically from some economic relationships with Japan because of (a) the unified negotiations over commodity prices which have been orchestrated by government agencies - because of the different nature of business / government linkages in Japan and (b) the token investment by customers in many resource projects which entitled them to information which was critical in price negotiations;
  • widespread concerns during the 1980s in the USA and Europe about difficulties in competing with the Asian economic models (as illustrated by Japan in particular) were altered in the 1990s;
  • serious limitation arise from trying to understand and debate East Asia and Australia's relationship with East Asian nations in terms of Western concepts - because social, economic and governance traditions are involved which are built on an entirely different intellectual base. A simplified attempt to consider this difference follows.