9 Sept 2015
Singapore Bids to Play Pivotal ASEAN Role in Belt and Road Initiative
While welcoming the Belt and Road Initiative, Singaporean business leaders, academics and politicians have emphasised the need for 'co-creation' in order to ensure that all participating countries fully commit to China's economic masterplan.
The potential impact of the Belt and Road Initiative on Southeast Asia needs to be viewed through the prism of China's robust relationship with Singapore, as well as its diplomatic ties to the ASEAN bloc, according to many in the region. The complexity of these relationships means that China is obliged to take a distinctly à la carte approach to dealing with the ASEAN nations. In some cases, it would be best to deal with certain countries directly, while others might be best accessed via Singapore, with a number of the remainder more appropriately tackled as a constituent part of ASEAN.
Dr Zhao Hong, a Visiting Senior Fellow with Singapore's Institute of Southeast Asian Studies, has clear views as to the value of the Belt and Road. He says: "China is coming to terms with the 'new normal' of slower, but better quality, growth and this marks a shift in strategic thinking towards engaging neighbouring countries.
"For Southeast Asia, the initiative provides an attractive platform for mutually beneficial economic development in various fields, notably infrastructure and industrial production. It also fits in with ASEAN's Masterplan on Connectivity and the vision of the Indonesian President, Joko Widodo, with regard to enhancing his country's maritime capability."
The fact that Xi Jinping, the Chinese President, chose to launch the Belt and Road Initiative in Indonesia in October 2013 is seen as an indication of the importance that China attaches to its ASEAN partners. Just over a year later, in November 2014, Indonesia announced a US$6 billion plan to develop its port infrastructure across the archipelago.
Xuhua Huang, a Singapore-based Partner with King & Wood Mallesons, a global law firm, sees the initiative as being the key driver of growth for Southeast Asia. He says: "By capitalising on this initiative, Southeast Asia will become one of the primary destinations for those Chinese enterprises seeking to expand globally. Undeniably, China's recent deal with Thailand on the construction of the Thai section of the Singapore-Kunming rail link brings this dream one step closer to fruition. This sees ASEAN members – with Singapore at the centre – inextricably moving closer to forging an impressive pan-Asian trade sphere. Singapore's next step, as one of the region's leaders in infrastructure and logistics, will be to aid neighbouring countries and fellow trading partners in developing their own resources."
With Singapore the most economically advanced country in the Southeast Asian region, Huang sees it as likely to take a lead role in bringing the Belt and Road Initiative to fruition. This was borne out by a March 2015 survey by Grand View, a Chinese think-tank, which ranked Singapore as the country with the highest investment value out of the 64 nations included on China's proposed programme.
Expanding on Singapore's likely role, Huang said: "The country's key industries have already drawn the attention of many Chinese businesses looking to invest in the region. In fact, a significant number of mainland enterprises have already successfully integrated their regional resources and achieved internationalisation through investing via Singapore. It is no surprise that Singapore has established itself as the second leading offshore hub for Rmb trading.
"We also expect to see Singapore's status become more prominent as a shipping and aviation hub for Southeast Asia. There is also likely to be an increase in trade and personnel exchange across the region. This will come as an inevitable consequence of the construction and development of a variety of infrastructure projects, such as ports and airports.
"At the same time, we anticipate that Singapore's central role in Southeast Asia's financial, trade and logistics services will expand significantly. These enhancements will be driven by the Initiative, but complemented by Singapore's established investment and financial services markets, its strong legal system, sound infrastructure and experience in financial systems, as well as by its political and social stability."
At the government level, many are also optimistic as to Singapore's likely role in the Belt and Road. Josephine Teo, Singapore's Minister of State for Transportation, says: "Given the scale of the Initiative – in particular, the maritime component that potentially spans 65 countries across three continents – there is much to be gained by approaching the Belt and Road as a process of co-creation. This will allow participating countries to see themselves as being capable of influencing the outcome, while retaining a sense of ownership over the pace and texture of any collaboration. If this can be achieved, the Initiative will usher in a new era of co-operation that will benefit all concerned."
The Minister also saw opportunities not just for Singapore, but also for Singapore's role within ASEAN. Highlighting this, she said: "Countries along the maritime belt will inevitably benefit from participating in the co-creation of this Initiative. Given Singapore's roots as a regional trading hub, it should adopt a more active role in a number of key areas related to connectivity, namely transport, finance and trade.
"Businesses can also operate out of Singapore to tap growth opportunities in the larger ASEAN and broader Asian region. It is important to remember, that the Initiative is not just ASEAN-related. The Belt and Road also extends to Asia, West Asia, and Eurasia – and we must not forget that. Those who have already set up businesses in China or elsewhere in the region will be able to expand further with every new flow developed under the Belt and Road programme."
Teo's words came in July this year as part of her address to the first Singapore Regional Business Forum, an event organised by the Singapore Business Federation (SBF). The forum saw 400 delegates from 18 countries discuss the implications, opportunities and challenges represented by the Belt and Road Initiative.
Assessing the prospects for the programme, Teo Siong Seng, Chairman of SBF, said: "The Belt and Road is an important initiative in terms of collaboration and sustainable development, specifically with regard to maritime infrastructure, shipping and trade, finance, tourism, hospitality and culture. Its success will inevitably result in huge economic, social and political benefits for Asia.
"As part of this, Singapore will leverage its role as a major financial, transportation, logistics and maritime hub in order to facilitate trade and investment in this fast-growing region."
While the vision is still taking shape, Teo believes that managing the multilateral ties and existing agreements will be critical for its success, especially bearing in mind its multinational scope. He said: "It all has to be achieved through mutual understanding. While the project has been initiated by the Chinese, we have to look at it as being owned by the people all along the route, ensuring that the flow can be truly smooth."
One note of caution, however, comes from Professor David Lee of the Singapore Management University. He said: "It is not possible for China and a number of ASEAN countries to dispel all reservations and co-operate merely on the basis of economic gains. Trusted by both sides, Singapore could act as a platform for China to enter the ASEAN market.
"Furthermore, Singapore could adopt a strategy in line with its Smart Nation policy, which has seen it committed to setting up infrastructure to boost internet finance and inclusive investment. This is seen as not only likely improve the quality of life in the more underdeveloped ASEAN regions, but also as a boost for Singapore's leading role in the bloc."
While it is only logical that Singapore will play a key role in the maritime components of the Belt and Road Initiative, the country sees itself as having a wider remit. In line with this, Singapore has long been investing in building ties with China – most notably with the Shaanxi province, a focal point for the new economic initiative and a region where Singapore has a 25-year trading history.
In April this year, marking this quarter-century milestone, the Shaanxi provincial government and the Commercial Bank of China organised a commemorative forum for industry and government leaders. As part of the event, five Singaporean companies and five Chinese private and government entities signed agreements aimed at furthering their collaborative efforts, with a particular focus on finance, logistics, technology and tourism.
Ronald Hee, Special Correspondent, Singapore