Singapore’s role in regional development

At the third Singapore Regional Business Forum (SRBF) held recently, Minister for National Development and Second Minister for Finance Lawrence Wong pointed out that while it seemed that Singapore’s hardware development is at its peak, it was in fact not the case. In the next ten years, Singapore will invest extensively in infrastructure development including Changi Airport Terminal 5 and a new Tuas mega-port. By then, Singapore will be doubling the capacity of the airport and container ports.

Besides the two above-mentioned infrastructures, the Singapore-Kuala Lumpur High-Speed Rail and the Singapore-Johor Bahru Rapid Transit System are also in the midst of preparations. Jurong district will be developed into the second Central Business District (CBD) area. Woodlands, which is located in the North, is set to transform into a Regional Centre, whereas Punggol will be converted to a creative cluster. These are the development projects that drive Singapore’s future growth.

Investments in infrastructure development are not for the mere sake of expansion but part of the development strategies for Singapore’s future growth. These investments are certainly not catered to domestic needs, instead, they aim to consolidate Singapore’s status as a transport hub in the region and the world. This further enhances the connectivity between Singapore and the world and maintains Singapore’s competitiveness in the future. The extensive investments in these infrastructures show Singapore’s great confidence in its future developments and that Singapore still has much room for development.

Presently, the Asian giant, China, is developing at an alarming rate. Some of China’s largest ports have overtaken other ports in the world within a very short time, causing a huge change in the whole regional economic state. Singapore has certainly felt competitive pressure as well. However, Singapore’s unique geographical location and its status as a hub cannot be completely replaced by China’s ports. Instead, with China’s increasing competency in port operations, Singapore and China can complement each other in port operations and transport.

Besides, Singapore can also play a vital role in the development strategies of the Belt and Road Initiative (BRI). Currently, some arguments suggest that China’s fast development will cause Singapore to be marginalised. These are however groundless remarks as marginalising Singapore is in fact not advantageous to China’s development.

Firstly, the development of the BRI must allow countries on the Belt and Road route to identify the prospects of a mutually-beneficial cooperation. Secondly, many development projects of the BRI, especially infrastructure development, require the support and cooperation of an international financial hub like Singapore. Even though China has established the Asian Infrastructure Investment Bank, it is impossible for the bank to include all infrastructure development projects. Thus, Singapore’s role is irreplaceable, especially in ASEAN.

It is estimated that developing Asia will need $1.7 trillion per year in infrastructure from now till 2030. Lawrence Wong pointed out that there is a huge gap that needs to be met. While Asia has achieved significant progress in its development, there are currently 400 million people who still live without access to power and 300 million people who do not have clean drinking water. Furthermore, HSBC estimates that USD$2.1 trillion in infrastructure spending will be required across merely six ASEAN countries, including Indonesia, Malaysia, the Philippines, Singapore, Vietnam and Thailand. However, the current spending trend would cover only USD910 million of the gap. Hence, Singapore and China have great opportunities to cooperation in this area.

In terms of finance, Singapore will certainly face competition from other financial hubs such as Hong Kong. However, Singapore’s close relations and familiarity with ASEAN countries are incomparable for hubs outside the region. Presently, about two-thirds of the infrastructure project financing arranged for ASEAN already comes out of Singapore. This is attributed to Singapore’s experts in banking and other professional services.

To conclude, Singapore is indeed facing two major challenges now – a domestic economic restructuring as well as a regional economic restructuring. However, as long as we grasp the opportunities for development, make necessary strategic adjustments, consolidate Singapore’s status as a finance and transport hub in the region, and at the same time accelerate Singapore’s connectivity (including digital connectivity) with the region and the world, there are still great prospects in Singapore’s future development in ASEAN and the whole of Asia.

Lianhe Zaobao editorial, first appeared on 19 August 2017.