November 13, 2002
Trade Minister Mark Vaile hopes the new
free-trade deal with Singapore will spell paydirt for Australia. Eric Ellis
reports it may not be such a walk-up start.
It's next to impossible to live a normal day in Singapore and not make the government richer. And we are not talking taxes or state fees. Turn on a light? The government's investment arm Temasek Holdings controls Singapore Power. Make a phone call? Temasek controls the three major "competing" carriers. Shopping for meat and vegetables? It owns Singapore Food Industries. Doing some banking? That would likely be at DBS Bank, controlled by Temasek. It even owns the zoo.
And then there's a holiday or flight – that's probably Singapore Airlines. A computer? Chartered Manufacturing. Rent or mortgage? The Housing Development Board, in whose apartments 90% of Singaporeans live or, for many of the wealthier who don't, the exclusive properties of Capitaland. You can't even escape to the private sector at Raffles Hotel: it's also ultimately owned by Temasek.
This is the same Singapore that federal Trade Minister Mark Vaile expects will yield "hundreds of millions of dollars" in new business opportunities for corporate Australia in a "free-trade agreement" he signed with the island-state, Canberra's first in Asia. But it's not easy to see where. Singapore Inc is pretty much allowed unfettered access to Australia. It owns the second carrier to Telstra, Optus Communications, Victoria's power grid, vast chunks of Australian CBDs and huge tracts of the countryside.
Where Singapore Inc controls more than $40bn of Australian investments in critical industries, Australia's investment in Singapore is $14bn. Australian coal fuels Singapore's power stations but the country's most visible presence is the Dome chain of cafes from Perth. Australia is excluded from meaningful investments in critical Singapore industries and there's little in the Singapore-Australia Free Trade Agreement to change that.
Vaile touts SAFTA as Australia's most comprehensive agreement since the Closer Economic Relations pact of 1983 with New Zealand. But SAFTA is no CER, a point made by Phil Forrest, Australian Chamber of Commerce president in Singapore, who says: "Is it everything we could possibly want? No. Is it a beginning? Yes."
Singapore Inc jealously guards its grip on the economy, which it says is one of the freest in the world. But cosy connections suggest it's more like a state cartel. Washington, for one, is discomfitted by its analysis of Singapore's own data that suggests up to 60% of the economy is government-controlled. US embassy officials say privately the findings are a factor as to why Washington has yet to conclude its own FTA with Singapore.
Singapore quietly denies the Washington analysis. Using the same figures as the US, it says its euphemistic "government-linked corporations" comprise just 13% of the economy. The truth is probably in the middle. At times, Singapore Inc seems like an elite club. Its promoters claim it practices the world's best standards of corporate governance. But Singaporeans only have the government's word for that and Singapore Inc, which also controls the media, employs an awesome public relations machine. Those who challenge it often find themselves on the wrong side of Singapore's libel courts.
Singapore's regime starts with Lee Kuan Yew, the senior minister and power behind Prime Minister Goh Chok Tong. LKY sits on a range of international advisory boards, such as US investment bank J.P. Morgan, and chairs the Singapore Government Investment Corporation, whose accounts and portfolio are a state secret. Indeed, it has only been in the past two years that Singaporeans knew who sat on the GIC board.
LKY's son, Lee Hsien Loong, is his deputy on the GIC board. Hsien Loong is also Singapore's deputy prime minister (and heir to Goh), its central bank chief and finance minister. It's as if he's Ian Macfarlane, Peter Costello, John Anderson and Nick Minchin rolled into one. (Singapore says such scenarios exist because it lacks the talent pool to spread jobs around.) His younger brother, Lee Hsien Yang, is executive president of Singapore Telecommunications. But it's his wife, Madame Ho Ching, who has stirred the most controversy. She was elevated from chair of state-owned Singapore Technologies, Singapore's biggest private company, to executive director of Temasek Holdings. Temasek was at pains to say the appointment was based on merit.
SAFTA negotiators say they pushed for meaningful reform of Singapore Inc. But one official says: "It simply wasn't negotiable." A joint communique from Vaile says: "SAFTA will improve the environment for Australian investment in Singapore.
Realpolitik seems to have won the day with SAFTA, the trade deal Australia needed post-Bali. The almost western Singapore is Canberra's best friend in Asia and shares Australia's concerns about rising fundamentalism in the region.