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Eugene K B Tan
China and India are widely expected to be the key drivers of a 'New Asia'. Singapore shares this optimism and views their economic and political ascent as presenting Singapore with a valuable opportunity to enlarge its international political, economic and cultural space. Indeed, Singapore has been quick to assert itself as a natural gateway for China and India to trade and invest in Southeast Asia as well as with each other. It has, thus, staked its claim as a pathfinder possessing unsurpassed business intelligence and cultural sensitivity to both countries on account of their being the cultural motherlands for the ethnic Chinese and Indians in Singapore.
Singapore's bilateral relations with China and India are warm and increasingly substantial. Trade with China has grown by almost 30 per cent annually since 1999. Not only is China Singapore's fourth largest trading partner with a ten per cent share, it is also Singapore's most important foreign investment destination totalling US$48 billion in 2004. Singapore's trade with Greater China the People's Republic of China, Hong Kong SAR, and Taiwan surpassed that with the US in 2002. More than 1,600 Chinese companies are based in Singapore and the number of Chinese listed companies on the Singapore Exchange (SGX) has also grown several folds from 19 in 2002 to 89 in 2005. Singapore is also working towards a free trade area (FTA) agreement with China, in tandem with plans for an ASEAN-China FTA agreement.
India is a latecomer to Singapore's political and economic radar. Nevertheless, it has overtaken China as Singapore's fastest growing trade partner. Between 1995 and 2004, India-Singapore bilateral trade tripled to SGD12 billion. With the Comprehensive Economic Cooperation Agreement signed in 2005, the opportunities for deeper bilateral economic relations are good. Singapore and India are considering developing special economic zones with Singapore providing the 'software' expertise on governance.
Given both China's and India's importance to Singapore, it is not surprising that Singapore is striving earnestly to position itself to capitalize on their massive growth potential and, in turn, enhance its economic well-being. With knowledge increasingly regarded as a new factor in production, the Singapore state's emphasis on knowledge as a means to gain competitive advantage is not surprising. This creation of new value derives from leveraging on information of various kinds, making sense of it and packaging it as business intelligence.
This resultant knowledge can be arbitraged in the economic, socio-cultural and political realms. This gives the knowledge holders/owners a potential strategic and competitive ability to discern the changing business environment, trends, threats, and opportunities, especially in cross-border settings. It also reduces possible moral hazards and engenders confidence and trust in economic activity especially in places where the business environment is problematic.
In some ways, this arbitrage of knowledge provides for trust and confidence, enabling other traditional factors of production (land, capital and labour) to come into play and reduces transaction costs. In its concerted effort to create economic space, Singapore has positioned itself as a competent and intimate knowledge arbitrageur on China and India. Much of Singapore's value proposition lies in its supposed cultural affinity (language, culture, and shared historical linkages) with China and India. This is complemented by a conscious endeavour to make sense of contemporary developments in Southeast Asia, China and India enabling Singapore to tap 'civilizational knowledge'.
Singapore is seeking to take advantage of economic opportunities in China and India, increasing Sino-Indian investments and trade in Southeast Asia as well as the burgeoning bilateral Sino-Indian economic relations by positioning itself as trustworthy, competent, and astute economic partner with close cultural and political ties that can help smooth the economic passage.
This supposed familiarity and connection with the civilizational heritage of India and China, by virtue of Singapore's majority Chinese and Indian minority communities, is touted as giving the Singaporean business community a unique competitive advantage. It is a re-emphasis of the role of business networks and small and medium enterprises in keeping the engines of growth growing. The difference between the past and present is that these networks are now mediated through Singapore's trade and economic development agencies and the ethnic chambers of commerce and industry.
As such, it is not surprising that Singapore seeks to maintain its fluency with civilizational knowledge through its cultural-linguistic policies. Maintaining its cultural heritage is regarded as being crucial to Singapore's long-term economic viability. The national effort also is seeking to ensure the sustainable development of a bicultural elite, well versed in the Chinese and Indian mother tongues and cultural heritage.
Not keen to rely only on its cultural bandwidth, Singapore is working towards being an intellectual hub on China and India through research and courses at the universities and as well as public education activities. All things considered, these efforts point to a concerted attempt at enhancing Singapore's economic prospects by capitalizing on the ethnic network capitalism that Singapore views as being useful for deepening economic engagement with China and India.
WATCHPOINT: In its quest to be a dominant value creator, Singapore will place a higher emphasis on its ability to arbitrage on knowledge, especially for companies and countries wishing to invest in China and India.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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