Sussing out Singapore

Eric Ellis

July 28, 2001

TIM Fischer, Australia's former deputy prime minister, likes to remind people of his years of expertise "networking" South-East Asia.

So when he advises Australians not to fret about Singapore Inc, as he did last month as Singapore government-owned companies eyed strategic Australian assets, he expects his take to carry weight.

But to hear Kerry Stokes of the Seven Network and Qantas boss Geoff Dixon describe Singapore Inc, it's almost as if some omniscient Dr No figure is sitting back in the air-conditioned city state, perhaps stroking a cat while armed with billions of Singapore dollars plotting world domination, or at least Australian domination.

So who's right about Singapore Inc? Fischer and some former colleagues in the Howard cabinet who will probably decide on sensitive bids by Singapore Airlines and Singapore Telecommunications? Or the self-interested Stokes and Dixon and their almost jingoistic brand of economic nationalism?

Singapore itself offers some insight – in particular a website, http://www.singapore-inc.com, registered by the island's premier planning agency, the Singapore Government's Economic Development Board.

Says the EDB site: "The Singapore Unlimited vision articulates Singapore's aspirations to become a first league developed nation and its strategies to enhance its economic activities in an integrated, holistic manner, using a total approach to systems.

"Through the co-operation and support of all parties – political leaders and government, institutions and academia, chambers of commerce and trade associations, industrialists and labour, foreign investors and local companies, the people, and all who have identified themselves to be the nation's stakeholders – the vision for Singapore will be achieved in harmony and with measurable success.

"Together, these stakeholders form Singapore Inc, working together like entities in a large corporation, each responsible for a specific aspect of Singapore's value chain, each working as a part of the team to support and add value to our business partners."

The EDB is an institution at the heart of Singapore Inc. Its chairman is Philip Yeo, one of Singapore Senior Minister Lee Kuan Yew's most trusted lieutenants and the type of Singaporean most foreign investors in Singapore think of when they speak of its impressive civil service.

If Lee Kuan Yew is the architect of modern Singapore, then Yeo is his senior draftsman, entrusted with luring multi-nationals to set up in Singapore, something which he has successfully executed, as any drive around Singapore's outer reaches suggests. Names like 3Com, Sony, Philips and Hewlett-Packard abound.

John Howard might deride branch-office economics but Singapore has made an economic philosophy out of it. Singapore is South-East Asia's richest and most economically equitable country.

A member of French phone giant Alcatel's international advisory board, a position he shares with World Economic Forum founder Klaus Schwab, Yeo was strongly rumoured last year (pre-tech wreck) to be joining Richard Li's Pacific Century group, Telstra's partner in Asia.

In Singapore, joining the private sector doesn't necessarily mean leaving public service. Senior Minister Lee Kuan Yew himself is a case in point. His son, Deputy Prime Minister Lee Hsien Loong, last year told Singapore's parliament that Lee Kuan Yew's membership of the advisory boards of car maker Daimler-Chrysler, financial giant JP Morgan and oil major Total helped the Senior Minister realise that Singapore needed to aspire to global standards to remain a player in the world market.

Yeo is at the heart of a fascinating national interest debate within Singapore: whether to continue what modern Singapore has been famously successful at – providing a user-friendly Asia Lite for hi-tech multinationals to exploit – or to discard that model and secure Singapore's future offshore with massive investments in secure economies.

In Singapore, Lee Kuan Yew's word is gospel and more recently he and his junior ministers have been exhorting Corporate Singapore to go forth and multiply beyond the island's cosy business community that Lee has described as microbe-free. He has ranked Singapore companies at just just three to four out of 10 on a scale of global competitiveness and reckons offshore competition would raise that level.

Putting the pieces together, it becomes clearer why famously micro-managed Singapore wants to pick off key Australian assets.

South-East Asia is hardly a secure investment right now. Indonesia and Malaysia are in penury and/or political turmoil, and often suspicious of wealthy Singapore, which sometimes sees itself almost as a Kuwait or an Israel, a prosperous state surrounded by hostile neighbours.

Relations with the Jakarta of presidents B.J. Habibie and Abdurrahman Wahid have been unsteady. Habibie famously derided Singapore as a red dot (of Chineseness) in a green (for Islamic) sea while the capricious Wahid openly sought Malaysia's co-operation in turning off Singapore's water supply, mostly piped in from Malaysia. Relations with the ascendant Megawati are expected to be warmer.

Relations with Kuala Lumpur, Singapore's once and perhaps future political parent, are cautious and frequently fractious. Lee Kuan Yew has been to Malaysia, Singapore's closest neighbour, just once in 11 years. And Malaysia has irritated Singapore by building a massive port almost next to Singapore and then luring some of Singapore's best foreign clients away with sweet deals.

Like any investor, Singapore Inc likes to get both bang for its buck and some certainty of a reliable operating environment, neither of which Asia can offer after the 1997-98 financial crisis.

But Australia, once derided by Lee Kuan Yew as white trash, has been that place since the 1997-98 financial crisis. And compared with Singapore's neighbours, Australia provides an open and buoyant economy, and a transparent and largely corruption-free one to boot.

It's not surprising, then, that Singapore Inc is extending its reach into Australia, with component companies taking out key infrastructural assets. Singapore Power controls Victoria's main electricity utility, PowerNet. SingTel is bidding for Optus and SIA for Ansett via Air New Zealand. Singapore Port Authority is rumoured to be seeking port operator Lang Corp, while Singapore's biggest bank, DBS, came close to a merger with Australia's Westpac late last year. Each of these Singaporean companies is controlled by Temasek Holdings, which is wholly owned by Singapore's Ministry of Finance.

Interestingly, this push offshore comes as Singapore attempts to deregulate its business sector. SingTel now faces competition from a host of new players, notably StarHub (which ultimately traces its control to the Singapore government) and next year Singaporean power users will have a choice of utilities as the SingPower monopoly breaks down. The Government also wants to privatise its holding in the port authority and is encouraging new competition in the banking sector.

The Singapore Government denies any connection between these various institutions' efforts in Australia, or elsewhere for that matter. Still, the boards of many of these companies, at the heart of the Singaporean economy, often seem a merry-go-round of connected interests.

The chairman of SingTel, Koh Boon Hwee, is also a director of SIA and about to become its chairman. SIA's current chairman, Michael Fam, is a member of the influential Council of Presidential Advisers and is a director of the media giant Singapore Press Holdings (SPH). Singapore president S.R. Nathan is a former boss of the press group.

The presidential council signs off the accounts of the powerful Government Investment Corp, which is chaired by Lee Kuan Yew and deputy-chaired by his son Lee Hsien Loong. Hsien Loong's brother is chief executive of SingTel. His wife chairs main SingTel competitor StarHub and is chief executive of government-owned Singapore Technologies. PSA board member Sim Kee Boon is also on the presidential council and is a director of Temasek, as is SingTel/SIA's Koh Boon Hwee.

Another presidential councillor, Lim Kim San, is executive president of SPH. His number two at SPH, Tjong Yik Min, recently resigned from SIA and is also chairman of Singapore's aviation regulator. SIA chairman Michael Fam is an SPH director, as is SIA chief executive Cheing Choong Kong.

Another SIA director, Ho Kwon Ping, is the ex-chairman of Singapore Power and also on the GIC board. The PSA board is littered with directors and officials of DBS Bank. DBS president Jackson Tai is on the SingTel board. His colleague Ng Kee Choe is chairman of Singapore Power.

The ties between Singapore and Australia are long and deep. Singapore's cabinet and business community is littered with alumni from Australian universities, many of them Colombo Plan scholars. Many of Singapore's major institutions and laws are fashioned after Australian models.

The father of the Australian car industry, Sir Laurence Hartnett, was a friend and adviser to Goh Keng Swee, Lee Kuan Yew's first finance minister and architect of Singapore's state-controlled economy.

And the relationship is mutually beneficial. Singapore is Australia's best friend in South-East Asia, Canberra's most reliable avenue of continued engagement in the region.

Despite the recent visit to Canberra by Wahid, Indonesia remains suspicious of Australia in the aftermath of the East Timor independence struggle. And in Malaysia, Mahathir agitates at every opportunity to keep Australia out of the region.

No surprise, then, that Australia and Singapore are enthusiastically pursuing a bilateral free trade agreement, a move which has angered both Malaysia and Indonesia, who see it as contrary to ASEAN's famous but often dysfunctional policy of regional consensus.

Australia's military involvement in East Timor has also been a watershed. TV images of burly, technologically enabled Australian troops sorting out Indonesia's mess were compelling to a nation that plays host to American naval and air force bases.

A projection of military muscle is best anchored by economic pull and Australia is the one country in this part of the world that has boomed.

And the way tightly controlled Singapore sees it, that's good enough reason to park some cash, perhaps permanently.