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Singapore needs to participate as super partner in infrastructure development
ASIA'S continued growth is highly dependent on infrastructure. Developing Asia will require US$26 trillion over the 15 years from 2016 to 2030, or US$1.7 trillion per year. With Singapore's outstanding achievement in the last 50 years of nation building, the country is in a good position to contribute to this opportunity and benefit from this growth.
At the same time, major potential infrastructure development will also challenge Singapore's role in the region. For example, the S$62 billion development of port of Gwadar and China-Pakistan Economic Corridor in Pakistan will provide a link from Xinjiang of China to Arabian Sea, allowing Chinese goods to reach West Asia and Africa, and bypassing the traditional Malacca Straits and Singapore as a port.
Our dominance as an aviation hub of the east may also face increasing competition from expanding airports across major cities from Beijing to Bangkok.
Thus, Singapore's relevance can longer be restricted to the physical presence of our island. The future of our economic leadership will be about creating new Singapore-branded nodes of infrastructural excellence across Developing Asia, using our deep expertise in the various sectors - in ports, airports, telecoms, special economic zones etc.
Singapore needs to participate actively and significantly as an infrastructure super partner in regional development, with strong infrastructure presence across countries and sectors. To achieve this, it will take strategic planning and efforts.
Governments of Developing Asia often have limited budget and foreign exchange, and we can expect the next generation of infrastructure development to have private sector participation. Therefore, we can expect the presence of private companies in Singapore to be felt.
Other than our expertise in infrastructure hubs as mentioned earlier, Singapore is also strong in smart city technologies, affordable housing, town planning, reclamation and other urban-related fields. In the context of this Future China Forum, these are areas where we can complement Chinese developers and sponsors. Singapore's expertise in international engagement will be our core value-add in collaborations.
As an infrastructure super partner, Singapore companies must also participate in the key areas of infrastructure sectors beyond those that we have clear advantages. Energy and transport are set to be the two most important sector in Developing Asia.
An estimated US$14.7 trillion will be needed for power and US$8.4 trillion for transport, taking up to 52 per cent and 35 per cent respectively of the total US$26 trillion.
Given their huge proportions to the total, Singapore cannot afford to miss them. These are also sectors that Chinese companies have immense strengths, for which Singapore companies can partner.
For example, in renewable energy, China is a leader with installed capacity of 78,100 MW, which was 25.8 per cent of the world's total, as at 2016.
In transport, China had a total length of over 110,000 km of railway track, as at 2015 and another 16,000 km of high-speed lines. The latter accounts for more than half of that across the globe. Partnering strong Chinese companies, such as China Railways Construction, Singapore companies will gain access to project experience that would otherwise not be obtainable from projects in Singapore.
In turn, Singapore can offer the Sino-Singapore collaboration an ecosystem of infrastructure related services through its status as a financial, arbitration, insurance services hub. Already there was a total of US$11 billion of outward direct investment (ODI) from China into Singapore in 2015 that was mainly channelled into investment in the Developing Asia rather than consumed in Singapore.
Some 60 per cent of projects in South-east Asia are now financed through Singapore-based banks.
Singapore's role as infrastructure super partner to China is not new.
Started since 1994, the government-to- government projects of Suzhou Industrial Park, TianJin EcoCity and ChongQing Connectivity Initiative, are excellent examples of strong collaborations. The long journey that these partners shared has built trust at many different levels and set firm foundations to work together outside China, in Developing Asia.
With this strong inter-dependent relationship, we can expect more success stories, including those related to the Belt and Road Initiative, supported by the potential signing of the Regional Comprehensive Economic Partnership (RCEP) between the countries.
- The writer is director general of Investments of AIIB, writing for FutureChina Global Forum in his personal capacity.