![Sample our Economics, Finance,Business & Industry journals, sign in here to start your access, latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5931/TOC-Subject-Sample-2021-Economics-Finance-Business-Industry.jpg"})
ABSTRACT
Singapore's regionalization stratagem led to the establishment of industrial parks in China, India and several South-East Asian countries. The strategic intent behind these overseas projects was twofold: exporting Singapore's competencies such as management know-how, technological capabilities and corrupt-free administration to regions where such positive factors were lacking and secondly, exploiting comparative advantages that each region had to offer. This paperFootnote 1 revisits Singapore's flagship projects in Indonesia, Vietnam and India. Evidence from on-site surveys and interviews are presented. This paper contends that progress in these privileged investment zones remains stymied by particular dependencies and challenges in the host environments.
Notes
ψ Estimated values were taken from ‘forced entry’ regression.
φ Values in parentheses are p-values for 2-tailed tests.
***Significant at 1% level.
**Significant at 5% level.
ψ Estimated values were taken from ‘forced entry’ regression.
φ Values in parentheses are p-values for 2-tailed tests.
***Significant at 1% level.
**Significant at 5% level.
*Significant at 10% level.
1. This research is funded by the Wharton-SMU Research Center, 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.
2. CitationStoever (1985), CitationDunning (1988) and CitationPorter (1990), among others, illustrate that a country's relative level and composition of outward and inward investments are systematically related to its stage of development. CitationDunning's (1988) investment development path model suggests that countries advance through five stages of development, which relate to different levels of net outward investment. The thesis suggests that countries in the more advanced stages of development will have to increase their outward FDI in order to achieve greater economic growth. An extension of this thesis is revisited in CitationDunning & Narula (1996).
3. The main ideas were set out in the policy document, Gearing Up for an Enhanced Role in the Global Economy (Singapore Economic Development Board (CitationSEDB), 1988). The 1990 Global Strategies Conference added new dimensions to these deliberations (CitationSEDB, 1990).
4. The principles of government involvement are rationalized in the 1993 Report of the Committee to Promote Enterprise Overseas (chapter 4). For a scholarly discussion on the political economy of Singapore's development strategy, see CitationRodan (1989); CitationRegnier (1991); CitationHuff (1995); CitationLow (1998) and CitationBlomqvist (2001). There is also an extensive political-economy literature on Singapore's regionalization program, succinctly summarized in CitationBellows (1995) and CitationYeung (1998).
5. The stress on exploiting personal ties accords with business practice preferred by the linked communities of ‘overseas Chinese’ (CitationRedding, 1990, CitationYeung, 1997; CitationBrown, 1998; CitationLehman, 1998), the ‘bamboo network’ which Singapore made use of in its industrial parks in Indonesia and China. Personal ties between Chairman, SEDB, and Ratan Tata (of the Tata Group) reportedly facilitated the move into India (Citation Asian Review, 1996).
6. Shakkei' is a Japanese landscaping strategy, where the scenery from one's garden is enhanced by incorporating the scenery from afar, such that the combined scenery is superior to each on its own. Extrapolated, the collective competitiveness approach envisaged that the development of regional economies, and sites, leads to positive complementary growth for Singapore.
7. & CitationYeoh, 2000; CitationThomas, 2001); various news reports, for example, The Economist (3 January 1998), The Straits Times (5 December 1997; 14 May 1999; 30 June 1999); and an unpublished (confidential) report commissioned by the Singapore Government.
8. 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 labor. 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 spillover from Singapore.
9. The Singapore consortium was led by Singapore Technologies Industrial Corporation (now SembCorp Industries) and Jurong Town Corporation, Singapore's main industrial estate infrastructure developer.
10. The Board, with representatives from the ministries of Trade, Finance and Interior, as well as the General Customs Department oversees the issue of investment licenses, import/export permits, and construction permits.
11. Other members of the consortium include Temasek Holdings, JTC International, UOL Overseas Investments, Salim's KMP Vietnam Investment, LKN Construction, Sembawang Engineering and Mitsubishi Corporation.
12. Details are given in Circular No. 8, List of Encouraged, Limited and Prohibited Industries in Export Processing Zones and High-Technology Industrial Zones, issued on 29 July 1997.
13. Indian universities reportedly graduate about 20,000 to 30,000 software engineers every year, and Bangalore has been a ‘hunting ground’ for Singapore companies and Singapore-based multinationals seeking low-cost IT specialists.
14. The Singapore consortium, Information Technology Park Investments Pte Ltd, includes RSP Architects, Planners and Engineers, L&M Properties, Sembawang Industrial, Technology Parks (a Jurong Town Corporation subsidiary) and Parameswara Holdings (the investment arm of the Singapore Indian Chamber of Commerce).
15. The Straits Times, 8 August 1999.
16. Population size of firms in each park is the number of operating tenants at the time of survey of each park – 78 for BIP, 64 for VSIP, and 90 for ITPL. Sample size is thus sufficiently large and the logit model is sufficiently robust and reliable.
17. ‘Respondents’ decisions to invest’ refer to past investment decisions, made at the time the park was built and/or marketed to the tenants, so as to reveal the effectiveness of Singapore's initial efforts at building a ‘second wing’.
18. This was a constant refrain throughout our interviews in ITPL.
19. The Straits Times, 30 August 2003; The Straits Times, 5 December 2003.
20. The Indonesian Bank Restructuring Agency has reportedly offered to sell the Salim Group's stakes in all the Riau projects – estimated to be worth S$500 million - in a packaged deal (The Business Times, 28 August 2001). Further restructuring has taken place, with the three main stakeholders now being SCI, Ascendas and the Indonesian government.
21. Law No. 22/199 allows provincial, district and municipal governments to write provincial laws, some of which contradict national laws, or test the boundaries of their power. The Megawati administration is now proposing a revision of laws on regional autonomy, but the direction remains unclear. For a discussion on the problems with regional autonomy and their impact on business, see van Zorge, Heffernan & Associates (April 2002). Interviews with BIP executives and tenants in 2003 have also alluded to this changed operating environment.
22. The Straits Times, 3 December 2003.