‘Created’ enclaves for enterprise: an empirical study of Singapore's industrial parks in Indonesia, Vietnam and China

Abstract

The dynamics of globalization have prompted governments to re-examine accustomed policies, and search for alternative strategies, in order to re-position their economies for the future. This paper explores the spatial context of state involvement in the new economics of competition, with the focus on Singapore's much publicized, and controversial, orchestration of its state enterprise network to encapsulate economic space for Singapore-based firms to expand into the Asian region. This strategic initiative is promulgated on the exportability of Singapore's ‘state credibility’, systemic and operational efficiencies, and technological competencies, to locations where these attributes are less certain. A logit model is applied to questionnaire surveys culled from Singapore's industrial-township projects in Indonesia, Vietnam and China and the findings are presented. The authors conclude that the strategic advantage created for the firms within these privileged investment enclaves, although remarkable, is often at risk from the administrative complexities, and socio-political milieux, of the host environments.

Keywords:

• Industrial parks
• investment enclaves
• Singapore

Acknowledgements

This research was funded by the Office of Research, Singapore Management University. The authors would also like to express sincere thanks to the journal reviewers whose comments added substantially to the final presentation of this work. The research assistance of Wong Siang Yeung, and David and Kevin Wongso is gratefully acknowledged.

Notes

1. Singapore was ranked fifth, behind Finland, New Zealand, Denmark and Iceland, in Transparency International's Corruption Perception Index 2004.

2. The stress of exploiting personal ties accords with business practices preferred by the linked communities of ‘overseas Chinese’ (Brown 1998), which Singapore made use of in its industrial parks in Indonesia and China.

3. Mechanisms include familiarization tours, formal and informal contacts amongst government officials, the constitution of ad hoc problem-solving committees, and visits by ministerial delegations that emphasize the establishment of interpersonal relationships.

4. The cataclysmic collapse of oil prices in the early 1980s impressed upon Indonesia's economic planners the need for a more broad-based development strategy. The Riau islands were an obvious choice to encourage investments not least because Singapore has shown interest in leasing these nearby islands to transcend the city-state's need for inexpensive land and labour. By the late 1980s, the perception from Jakarta was that Singapore was ‘bursting at the seams’, and that the time was right to position Batam and the other Riau islands to take advantage of the spill-over from Singapore.

5. The Singaporean consortium was led by Singapore Technologies Industrial Corporation (now SembCorp Industries) and Jurong Town Corporation, Singapore's main industrial estate infrastructure developer.

6. Other members include Temasek Holdings, Ascendas International, United Overseas Land, Salim's KMP Group and Mitsubishi Corporation.

7. VSIP Fact Sheet, May 2004.

8. The Chinese consortia's 35% stake was shared amongst 12 organizations, mainly national state-owned enterprises and investment companies of the Suzhou city, Jiangsu province. The Singapore consortium's 65% stake was distributed amongst 24 organizations, mainly Singapore GLCs, and the Salim Group (through a subsidiary, KMP China Investments).

9. S. M. Lee unhappy over Suzhou park progress, The Straits Times, 5 December 1997.

10. This is now an extensive literature on the problems encountered in the China-Singapore Suzhou Industrial Park project including scholarly works (Pereira 2003); feature articles in popular magazines such as Asia Week, Far Eastern Economic Review, Fortune, Forbes and The Economist, and an unpublished (confidential) report commissioned by the Singapore government.

11. The Suzhou experiment, The Straits Times, 30 June 1999; Singapore drops control of Suzhou Park, South China Morning Post, 29 June 1999.

12. Suzhou Park: 10 Years on, The Business Times, 9 June 2004.

13. Corruption remains endemic. The Vietnamese government itself recently estimated that light-fingered bureaucrats creamed off at least 20% of the infrastructure spending, The Economist, 14 September 2002.

14. SembCorp Park Viet venture turns profitable, The Straits Times, 1 December 2003.