For a city-state, the rise of Singapore has been the subject of much economic study. A prevailing point of interest has always been its ability, or one could say decision, to venture beyond its shores to be globally competitive. Proving to be a small but worthy participant, Singapore has consistently been said to punch above its weight.
In this interview, we take the opportunity to speak to Mr. Lim Neo Chian who was very much in the thick of the action when Singapore started to spread her wings. We wanted to explore and gain insights of the journey, challenges and gain awareness of what was required to take on new worlds. Past experience remains ever more relevant as the modern economy grows more connected and Singapore’s engagement with the global community increases.
Currently the Chairman and Director of Ascendas Hospitality Trust, Deputy Chairman of Gardens by the Bay, and Director of Singapore Cruise Centre Pte Ltd, Mr. Lim’s previous active roles in Jurong Town Corporation, China-Singapore Suzhou Industrial Park Development, Bangalore IT Park Board, Economic Development Board, Singapore Tourism Board, ST Engineering, SCP Consultants and Chief of Army, Singapore Armed Forces make for rare breadth and depth of experience.
I started our conversation by asking Mr. Lim how he first got involved in Singapore’s projects in emerging markets, in particular with the Suzhou and Bangalore Industrial Park developments.
Mr. Lim: After leaving the army in May 1995, I assumed the appointment of CEO of Jurong Town Corporation (JTC). My involvement in Singapore’s regional projects was very much an extension of my work at JTC. At that time, JTC had a number of subsidiaries managing domestic developments as well as looking at international consultancy and real estate investments. They had already started some early ventures into emerging markets such as India, China, Vietnam and Indonesia through a variety of means, be it partnerships or by themselves.
The early 1990s was an exciting time to start looking at external markets especially with the dual emergence of India and China. Hence when I joined JTC, some initial efforts had already been started. Due to JTC’s industrial experience, it was a natural progression for us to be involved in strategic projects such as the China-Singapore Suzhou Industrial Park Development.
Being highly hands on with these projects, what was the sentiment like on the ground both domestically and in these emerging markets?
Mr. Lim: It was the 90s when both China and India had just opened up to Foreign Direct Investments (FDI). They held great promise but were challenging – becoming new factors in the equation. Many Singapore and Singapore-based companies were beginning to look at investing in these huge markets. This was in comparison to the 70s and 80s when the economic environment was very different.
Simultaneously, Singapore had a new Prime Minister Goh Chok Tong, who at that time was looking to re-assess for new areas of growth in the global competitive landscape. There was recognition of the need to be plugged into the growth of the region (ASEAN and the larger India and China markets). Always aware of our finite domestic resources, we at JTC were particularly conscious of having to deal with land constraints.
Putting all these factors together, it was a natural step to focus our efforts to plug into the growth of the region. This was referred to as Singapore’s second wing. The first wing was to focus on Singapore’s own growth while the second was to plug into the region. It was hoped that with two wings, Singapore would continue to soar.
With this push into the region, how did it affect domestic companies?
Mr. Lim: They were able to tap onto this effort to expand. FDI into these emerging markets would include Singapore companies. In fact both Singapore companies and many of our tenants were already looking at these emerging markets. Our projects in these emerging markets would allow JTC to remain connected with them. The result of this overall shift meant that the competitive landscape became Asia instead of focusing on Singapore alone.
Would it be an initiated foresight action or a reaction to circumstance? Could it be that these markets were beginning to open hence the increase in FDI interest, or was it the increase in FDI interest that prompted these markets to respond?
Mr. Lim: It was probably both pull and push. The ability to see an approaching change combined with proactive action. Without strong leadership in these emerging markets, such as Deng Xiaoping in China and Manmohan Singh in India, possibly little foreign investments would have moved into these markets. So in a sense it is reactive – reacting to change that was happening in these emerging countries. However it was not reactive in the sense of following a crowd since it was an opportunity identified at an early stage, and a decision was made to go in early and contribute to the transformation of these emerging economies.
I believe it was also because Singapore was in a position to be able to add value from its own experience. This did not come without risk but if action is delayed then the opportunity to participate diminishes.
Do you believe that this is a model that can be constantly replicated because of the inherent domestic challenge of constrained resources?
Mr. Lim: I personally think there is a necessity to take a strategic approach to some of these investments. With a strategic project, the investment timeline would need to be long-term as short-term profitability may not be good and there would be various challenges to overcome. Being early into a project would mean bearing higher risk but it is only then that the full strategic value can be obtained. Ultimately the strategic importance of a project to both countries and Singapore businesses is a huge factor.
Today the challenge is to identify such project opportunities where an industrial development project like Bangalore or Suzhou could be a beachhead for Singapore and Singapore based companies to expand.
The above brings up the importance of knowing that value is created or added for all sides when conducting such industrial developments. This is very different from a single company standpoint where looking to venture internationally is strictly commercial, a matter of fundamental risk reward balance. A listed company naturally would have both short and long-term goals which means it must carefully evaluate what it feels is achievable. Interestingly having Singapore led industrial developments like Suzhou and Bangalore actually help give leverage to domestic companies who wish to expand.
Following the decision to strategically invest, then comes the challenge of implementation – what are some of the immediate next stage challenges?
Mr. Lim: Once the strategic decision is made to proceed, it usually means going into a location early and there are a lot of challenges when doing that. Firstly the local environment can be difficult – from legal and infrastructure to daily operations. But this is expected. Having a local partner who understands these issues is essential as there is much learning and adaption to be done. Ultimately, learning is one of the main reasons to proceed with such a strategic project in the first place. Lessons from the first project can then be applied to the second and third as familiarity increases, as well as in reducing the risks for Singapore and Singapore-based companies to make investments.
Another major challenge would be the alignment of stakeholder (both investor and local) interests. With high investments needed at the onset, all stakeholders in the project need to have expectations aligned right from the start. Particularly in relation to the objectives and deliverables of such investments and their expected returns and timelines.
With all these obstacles and risks associated with emerging markets would it be more prudent to search or balance opportunities by moving into developed markets?
Mr. Lim: From a strictly commercial basis, business opportunities are everywhere. With an understanding of the local environment, a good local partner to work with and moving at the right time, there is potential to go anywhere. However beyond pure commercial considerations, there needs to be an awareness of where we can add value and where our major interests lie in the longer term– this applies to moving in any market be it emerging or developed. A company’s resources are finite hence making the right decisions are crucial but the basis for their decisions will be strictly commercial. For projects like Suzhou Industrial Park and Bangalore IT Park, considerations should take account of long-term high-level interests, not just commercial, especially when significant public money is used.
Singapore has had the opportunity now to be involved in various projects – what are some of the key takeaways in your opinion?
Mr. Lim: Besides the usual commercial considerations that all projects have to undertake, I personally feel that Singapore’s own domestic model cannot always be replicated – such as the close coordination and relationships between government bodies that supported each other through economic and industrial development. A key takeaway would be the need to learn the local lessons of the target market, form partnerships and the requirement to adapt our own experience and knowledge to the local context. These are some of the value-adds that Singapore brings rather than a wholesale replication of our own success.
The global environment changes rapidly hence the Singapore model is not necessarily new any more. I do however feel there is always an element of nation building involved for Singapore to continue its international involvement efforts as this brings opportunities to our own companies and international job opportunities for Singaporeans. As Singapore companies proceed overseas, they need to however remain aware of the need to use Singapore talent as a base and core for their overseas activities. There is a depository of knowledge gained that should be kept, developed and shared. I look forward to seeing more Singapore global companies provide growing job opportunities for Singaporeans in Singapore and overseas, whose hearts are in Singapore with Singapore providing the nurturing and supporting environment. In this regard, our industrial township projects in emerging markets can play a complementary and supporting role.
Hearing Mr. Lim share on his experiences certainly highlights the different challenges, motivations and awareness one has to have when taking on global initiatives. While it is a combination of perhaps previously known and new points, what is clear is the need to learn from the past, for application and adaption to the future. This is a learning that is certainly universal and relevant to many of us in our individual present situations.