The Singapore Chamber of Commerce and Industry in China (SingCham) is a nonprofit organization facilitating communication and economic growth between Singapore and China in the electronics, real estate, IT and professional services sectors. Chin Yee Koh, SingCham executive director, talks to CHINA ECONOMIC REVIEW about the challenges and opportunities Singaporeans face in the China market.
Q: How does SingCham bridge the economic relationship of both Singapore and China?
A: SingCham brings together businessmen of all levels from both sides for networking and exploring opportunities. We also familiarize our members on business, economics and other issues such as Chinese history, culture, philosophy, politics, to give them a better understanding of the country. We also familiarize the Chinese on Singapore’s social, political and economic aspects. By so doing, we aim to promote mutual understanding, appreciation, as well as exchanges and cooperation by both sides.
Q: How has economic relationship between China and Singapore evolved over the years?
A: Economic relations between Singapore and China evolved very well. Singapore’s foreign direct investment (FDI) in China has seen two peaks. One [peak] was in the mid 1990s, and we are witnessing the second one now. By the end of 2006, Singapore’s FDI in China reached US$30 billion with more than 15,500 projects. In the first four months of 2007, the country’s FDI in China was recorded [at] US$928 million. Singapore is China’s fifth largest foreign investor, and China is Singapore’s largest FDI destination.
Q: What are the key challenges entrepreneurs and investors face in China?
A: An inconsistency between policies and actual practice, like local “norms” that deviate from policies, unexpected sudden changes in local policy, regulations and ways of handling things, intellectual property rights issues and barriers to entry in certain industrial sectors.
Q: Can you elaborate on the inconsistencies between policies and actual practice?
A: Sometimes the local [Chinese] government or local government bureaus handle things in ways that are different from what the law states. Let me give you an example: I was a general manager of a [chemicals] factory in Jiangsu, until April of this year. When we started investing we were told that the threshold for certain pollutants was set at a certain level. But after two years, we were told overnight to adjust [our] technologies because this level had changed. We had little problem adapting because our technologies were relatively new. But other investors – be they local investors or foreign investors who have been there for five to eight years – may have a problem because their technologies don’t meet the new requirements. I would expect [the Chinese government] to bring about changes over a period of time, so that enterprises have ample opportunity to adjust. However, I suspect that in this case, it was not a policy change overnight, but a policy enforcement overnight.
Q: What effect has China joining the WTO – and the market opening that has come as part of this – had on opportunities and challenges for business growth?
A: Singapore is a strong supporter of global free trade. Singapore believes that the free flow of trade, services and investments will allow countries to capitalize on their competitive strengths and lead to a more optimal allocation of resources.
Q: What is the government’s view on bilateral trade agreements?
A: Regional and bilateral free trade agreements (FTAs) can be a complementary process [and encourage] global trade liberalisation efforts. Consensus building can also be achieved more rapidly in regional and bilateral FTAs. We are now negotiating a FTA with China to further promote bilateral economic exchanges and cooperation.
Q: What are the prospects for small- and medium-sized Singapore enterprises in China?
A: I think it will be growth across the board. For example, in recent years we have seen Singapore companies in finance and banking, logistics, electronics, real estate. In these few sectors, Singapore companies have been doing very well in China. Many companies now see China as one of their most important engines for growth.