March 22, 2004
STRANGELY FAMILIAR
TO the Australian eye, Singapore is a strange place whichever way you look at it: Asia Lite, Switzerland-sur-tropiques, neither East nor West, Disneyland with the death penalty, the only shopping centre with a seat at the UN.
This strange little country also happens to be Australia's best friend in southeast Asia, its Victorian-era views clearly pleasing to Australian Prime Minister John Howard.
While previous Australian prime ministers, particularly Labor ones, have periodically sparred with Singapore's leaders, Howard regards the city-state's current Prime Minister, Goh Chok Tong, as a close personal friend and fellow traveller.
To the chagrin of their mostly Islamic neighbours, Singapore and Australia are as one in almost every critical aspect of foreign affairs: Iraq, the war on terror, regional Islamic extremism, trade. It follows that Singapore is also Washington's best friend in the region, too.
It only takes a walk through Singapore's suburbs to see how close it is to Australia. The smart areas could be Noosa, the lesser regions the Brisbane suburbs. That's because Australian civil servants, as London's colonial proxy in the 1950s and 60s, helped build Singapore and did so in the manner they were familiar with. The personal ties are strong. Many of modern Singapore's leaders were Colombo Plan scholars at Australian universities.
Goh Keng Swee, considered the architect of Singapore's manufacturing-based economy, was a close friend of Sir Lawrence Hartnett, the father of the Holden. This tight relationship has strengthened further since the Bali bombings in October 2002. Singapore and Australia are agreed on the threat posed to the region by groups such as Indonesia's Jemaah Islamiah.
It was the "soft-target" Bali bombings, which sprang from a failed JI plot to level harder official targets in Singapore, that underpinned a Free Trade Agreement between Australia and Singapore last year. Unsurprisingly, it was with Singapore that Australia made its first agreement on inflight air marshals.
Last year's FTA, Australia's first since the Closer Economic Relations agreement with New Zealand in the early 1980s, provided for largely unhindered investment in each other's economy. But given Singapore Government's direct control -- by ownership of key businesses -- of its own economy, it is difficult to see, say, Telstra becoming the main competitor in Singapore of government-owned Singapore Telecom, as SingTel has in Australia with its recent $15 billion takeover of Optus, Singapore's biggest overseas acquisition.
That is borne out by statistics. Recent Australian government data shows Singaporean interests, mostly government-owned, controlling about $32 billion of Australian assets. In contrast, mostly private Australian interests own just $1.7 billion in Singaporean assets. Anecdotally, the most prominent Australian investment in Singapore is the Perth-based cafe chain Dome. In Australia, Singapore Inc owns Optus, the Victorian utility Powernet and swathes of prime metropolitan property.
As for the billions in extra trade that Trade Minister Mark Vaile claimed would be generated by the FTA with Singapore, that has yet to materialise. That is partly explained by Singapore's sluggish economy, which prime minister-designate Lee Hsien Loong hopes to kick-start by at least a partial reform of his Government's grip over business. And when that happens, and the playing field levels for foreign investors, Australia's interests in Singapore may then be more evident than coffee and a focaccia.