Caution needed in exploring new project with China

 Caution needed in exploring new project with China

WHEN Deputy Prime Minister Teo Chee Hean revealed recently that Singapore has agreed to explore a third government-level project with China in its western region, he took pains to say Chinese Vice-Premier Zhang Gaoli had proposed the idea during his visit to Singapore last October.

Mr Teo's remarks, made during his visit to China at the end of last month, can be taken to suggest that Singapore was not the one which broached the idea and that it had handled the proposal with care by deliberating on it since last October, before making it public.

China's proposal for a third project can also be taken as an affirmation of the good progress of two existing projects. Also noteworthy is that the current leadership continues to find Singapore of strategic value to the world's second-largest economy.

But Singapore needs to exercise caution before taking this project on board.

First, Singapore's two government-to-government projects with China are known for their rocky starts. There is a chance the third project could face the same fate.

The Suzhou Industrial Park (SIP), which broke ground in 1994, got off to a sluggish start, largely due to competition from a rival business park backed by the Suzhou government.

The turnaround came only after Singapore cut its stake from 65 per cent to 35 per cent and its share of the park from 70 sq km to 8 sq km.

The Tianjin Eco-city began work in 2008. It is envisaged as a model for China in promoting sustainable living. It has run into obstacles too, due to competition from neighbouring developmental zones, property cooling measures and delays in infrastructure construction.

Given the increased interest among Singaporeans in the use of public funds, the stakes - politically and economically - are even higher for Singapore should the third project flounder or, worse, end up incurring losses for years.

The SIP, for instance, started making profit only in 2001, after cumulative losses of US$77 million (S$96 million) in the preceding seven years, which triggered criticisms then that taxpayers' money had been wasted on the project.

In addition, a third government-to-government venture would mark a policy reversal for Singapore, which in recent years has adopted a private sector-led, government-backed model towards joint projects amid murmurings that it was diverting much-needed resources to China.

The Sino-Singapore Guangzhou Knowledge City in the southern metropolis, Singapore-Sichuan Hi-Tech Innovation Park in south-western Chengdu city and Sino-Singapore Jilin Food Zone in the north-eastern province use this model.

In Guangzhou for example, Singbridge, a wholly owned subsidiary of Singapore investment firm Temasek Holdings, runs a 50-50 joint venture firm with the Guangzhou Development District Administrative Committee.

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