Sea zones and floating cities: a prime opportunity for Singapore

SINGAPORE needs to fundamentally transform its international economic relevance through a focus on developing itself as an Indo-Asia Pacific super-connector. And this can be achieved through hosting floating charter cities (FCCs) in special governance zones.

Beijing's ambitions to transform the Greater Bay Area into an integrated economic and business hub will impact Singapore. This hub will encompass Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing.

Touted as a rival to Silicon Valley and other regional commercial centres across Asia, it directly competes with Singapore's role as an Indo-AsiaPac command and control centre for international corporations. While nebulous, Beijing's plans to develop the Greater Bay Area are seen as a hedge against a slowing domestic economy and growing global protectionism. US investment bank Morgan Stanley predicts that by 2030, with a population forecast to reach 71 million, the region's GDP will grow to US$3.2 trillion.

The development of the Belt & Road Initiative (BRI) also has implications for Singapore's maritime sector. The buildout of transport infrastructure and greater connectivity, with enhanced inland transportation across Eurasia, will divert a significant amount of seaborne trading volume away from maritime routes. This indirectly impacts Singapore's status as a maritime hub.

Charter cities - zones administered by third-party governments which guarantee the free movement of people, goods and capital - can reorient and strengthen Singapore to meet this challenge and counter this long-term threat.

During the late 19th and early 20th centuries, China was host to concessions leased to foreign states as a result of unequal treaties. Foreign states leased land from the Chinese government, with parcels of land then subleased to private lessees.

These developments contributed to Shanghai in the 1930s emerging as the "Paris of the Orient". This period saw Shanghai divided into three distinct political spheres: the International Settlement, the French Concession, and Greater Shanghai.The International Settlement was a British-American enclave, while the French Concession was ruled by a Paris-appointed governor. Greater Shanghai was administered by the Chinese central government.

Taking a post-colonial approach, Singapore could emulate concessions mutually beneficial for all involved parties. Special International Zones in Practice and Theory, by Tom W Bell, published by the Chapman Law Review in 2018, notes the existence of an entity known as the special international zone (SIZ).

An SIZ describes an area which a host nation state designates as a foreign territory for the purposes of specific local laws, while leaving other such laws and applicable international obligations in force. Usually taking the form of special economic zones (SEZs), these SIZs have proliferated internationally in recent decades.

Dubai International Finance Centre is a case in point. Inspired by the example of Hong Kong, which imported a common law legal system friendly to private enterprise and high finance, Dubai emulated this by employing retired English judges and writing "the laws of England and Wales" into its legal system, according to Bell.

SIZs offer countries a mechanism for selectively unbundling their territorial services in response to necessity and the constraints of international law. In the case of Singapore, this can take the form of floating cities within specific sea zones designated as SIZs within its territorial waters.

Leased to foreign states or private administrative corporations on a 99-year basis, with the option to extend this by another 99 years, they could function as venues for cultural diplomacy and socioeconomic activity. Partner nations could benefit from having an exclave in the Indo-AsiaPac, in close proximity to growing major economies such as Indonesia, India, China and Japan, as well as a stake in the prosperity and stability of the region.

Meanwhile, Singapore would benefit from this enhanced international connectivity, as well as the additional space that such floating cities offer, alongside the enhanced tourism potential and economic diversification such infrastructure can bring. In addition, these floating cities could leverage Singapore's strengths in infrastructure financing through the debt securities and business trust structures platform of the Singapore Exchange (SGX).

A GLOBAL NETWORK OF 'SINGAPORES'

The alternative is for Singapore to lease sea zones and construct a network of floating charter cities - with it as the guarantor government - in places such as Sri Lanka, Bahrain, Oman, Italy and beyond. The optimal manner to operate these leased sea zones could be as a form of special administrative zone (SAZ), modelled on the concept of shared sovereignty between the host nation and Singapore.

The "one country, two systems" model practised in China for governing Hong Kong and Macau is a precedent, with such SAZs potentially maintaining high degrees of autonomy. They could maintain separate political systems, issuing their own passports and operating as separate customs territories, with independent executive, legislative and judicial powers.

In a model of shared sovereignty - precedents exist in the form of associated statehood practised by European territories of Liechtenstein, Monaco and Andorra - these SAZs could contract a wide range of agreements with other jurisdictions, such as a mutual abolition of visa requirement, mutual legal aid, air services, extradition, handling of double taxation and others. Governance alternatives exist, such as a confederate union formerly maintained by Serbia and Montenegro, as well as the constituent countries framework maintained by the Netherlands, Denmark and the United Kingdom.

In the 1990s and 2000s, as part of its regionalisation strategy and growing its external economy, Singapore established industrial parks in various countries, including China, Vietnam and India. By leveraging this experience, as well as the infrastructure and expertise of conglomerates like Keppel, Sembcorp and CapitaLand, there is good potential for such projects.

An earlier opinion piece, The blue economy and seasteading: A key growth driver for Singapore" (https:// www.sgsme.sg/news/government/blue-economy- and-seasteading-key-growth-driver-singapore) in January 2019, highlighted the vast socioeconomic potential FCCs represent.

Long-term structural factors may inhibit the growth prospects of hydrocarbon, maritime and offshore engineering sectors, so Singapore firms must explore new spheres of business while leveraging their core strengths. Designing and developing floating charter cities opens up opportunities and aligns with our competences in infrastructure financing and maritime engineering. Japan's Shimizu Corporation is already assessing the prospects for developing a floating structure called the Green Float in Singapore waters.

FCCs the size of the British territory of Gibraltar (6.8 sq km), Monaco (220 hectares) or Vatican City (44 hectares) can be hosted in Singapore's 800 sq km of territorial waters, contiguous to the coast or connected to the main island with floating roads. By comparison, Singapore's Changi Airport with its current four terminals is estimated to be about 13 sq km (1,300 hectares) in size, while islands such as Brani (1.22 sq km), Sentosa (4.71 sq km) and Ubin (10.19 sq km) are comparatively smaller.

Indeed there is scope for Singapore to host floating cities, as well as reorient its maritime infrastructure to cater to such large-scale projects. But there are constraints: it lacks clear regulations governing the development and deployment of floating structures and a strong institutional bias towards land reclamation. A simple solution would be to designate a small area of Singapore's sea space as a sandbox for testing regulations governing floating structures; Singapore's central bank has already established a precedent with its regulatory sandbox for financial technology solutions.

FUTURE RELEVANCE

Historically, concerns have always emerged over the long-term economic viability and physical security of city-states. Most major cities greatly benefit from being integrated into larger nation-states, with Hong Kong, London and New York City being cases in point.

However, the global rise of protectionism and right-wing nationalism risks compromising global trade flows and behavioural norms in international relations, risking the economic and political security of city-states. The growth of its neighbouring countries in Southeast Asia also holds implications for the long-term business infrastructure of Singapore; it can no longer leverage the comparative underdevelopment of Asean maritime infrastructure to maintain its role as a supra-regional transshipment hub.

The growth of China and the buildout of the BRI, coupled with technologies of the Fourth Industrial Revolution - automation, additive manufacturing, artificial intelligence (AI), robotics and other cyber-physical systems - implies that Singapore's maritime ecosystem, as well as other industry verticals, are likely to see fundamental shifts in the coming decade.

Singapore has exhibited flexibility and strategic imagination as it has evolved, having added new layers to its socioeconomic matrix as it economically matured. Traditionally, its economic growth corresponded to radical reforms of its economic and urban management paradigms, with sociocultural continuity subordinate to socioeconomic growth.

This now has to change as its policymakers and business executives grapple with the impact of ageing demographics and an evolving social environment, while attempting to guide its socio-cultural continuity in the face of ageing demographics and other social changes.

FCCs and sea zones offer Singapore a unique chance to leverage the potential of untapped sea space. It can also meld its strengths as an infrastructure financing hub and maritime centre, as well as the relative competence of its technocrats. The key element needed now to spur this is some imagination and political will.