Graft probe slows Chengdu down

CHINA - It used to take as little as two weeks for Singaporean Vincent Chia to get visa approvals for himself and his American staff to work in the south-western Chinese city of Chengdu.

But he had to wait almost four months after applying in April for a visa for a foreign teacher to work at ChildFirst China, a kindergarten chain which he runs as general manager of operations.

He got the visa only after he sought help from IE Singapore, a government agency that helps Singapore businesses expand overseas, Mr Chia, 43, told The Sunday Times.

"It was frustrating because we were just waiting and didn't know what was causing the hold-up. It also inconvenienced us because we had to get an expat teacher from another English school in the meantime," added Mr Chia, who has lived in Chengdu for about six years and was previously running two other businesses.

His experience reflects how an ongoing graft probe in Sichuan province has led to a more cautious and slower business environment in Chengdu, the provincial capital.

Government officials are treading more carefully amid investigations into associates of former Sichuan deputy party boss Li Chuncheng, who was sacked last December. More than 50 officials have been replaced and several prominent corporate honchos detained in the past year.

As a result, the government's nod has become harder to get as the once-dependable guanxi - or network of relationships - is not working as effectively, said several Singaporean and Chinese businessmen based in Chengdu, some of whom declined to be named, citing sensitivities.

Singaporean architect Alex Ong said land acquisition deals for some of his local clients are taking longer now. "This exerts an indirect impact on us and is giving us more of a stretch," he said.

Another Singaporean businessman said getting government officials to respond promptly to their applications or requests has become a "very painful process". It took months to get power supply running at one of his new buildings, he added.

A Chengdu businesswoman, who heads an events planning company, said officials are following the rulebook to get things done, even for the seemingly smallest things like issuing traffic entry passes at the World Chinese Entrepreneurs Convention (WCEC) held here last month.

Some, however, are hopeful that the crackdown would not derail but instead aid Chengdu's efforts to attract investors. It could even help the city regain the limelight after it was overshadowed by neighbouring Chongqing city from 2007 with the arrival of its maverick party boss Bo Xilai until his ouster last year.

Professor Huang Jing of the Lee Kuan Yew School of Public Policy said the arrests might scare off some investors in the short term but they are unlikely to slow economic growth.

"The arrests send a clear message that the corrupt business culture and the use of political privilege to gain leverage are not welcome. If I were an investor, I would be encouraged instead."

A sign of Chengdu's rising international appeal is how the city of 14 million famous for its pandas and spicy food hosted two global business forums this year: the WCEC and the Fortune Global Forum. Nearly 250 of the world's Fortune 500 companies are also based here. With about 60 international direct flights, it is an aviation hub for the western region.

Singapore Chinese Chamber of Commerce and Industry president Thomas Chua said most Singaporean businesses are not overly concerned, adding that Chengdu's antigraft sweep should be viewed positively as it means Beijing is serious about tackling corruption.

Mr Victor Foo, chief executive of IT firm Digistore Solutions, is looking to invest up to $15 million in Chengdu as labour costs here are much lower. Concerns about the Bo Xilai scandal shifted his investment focus from Chongqing to Chengdu at first, but the clincher was Chengdu's easy availability of engineers and schools that focused on research.

Mr Ong added that Chengdu is the more stable city that provides business continuity while Chongqing can be seen as the younger, more unpredictable upstart. "Chengdu can be vibrant for the next 10 years. I don't think the repercussions from the arrests are as severe as Chongqing's political upheaval," he said, citing how the city has operated smoothly despite the detentions.

Some Chinese are also confident that Chengdu is on the right track.

Mr Li Yonghui, 26, who works in a semiconductor firm after moving from north-eastern Dalian city seven years ago, has seen skyscrapers rise from empty land in the city's south.

"Compared to Beijing and Shanghai, we still have a long way to go, but if we continue to develop, I think we can get there."

esthert@sph.com.sg

Get a copy of The Straits Times or go to straitstimes.com for more stories.