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5G DEBATE

Huawei presents a 5G litmus test, but Singapore likely to stay neutral

Singapore

THE Huawei controversy may make it trickier but Singapore regulators and market players will likely keep a neutral, multi-vendor stance on 5G providers, observers have told The Business Times.

This is even as other countries pull back from Chinese tech giant Huawei, citing national security concerns.

Security expert Graham Ong-Webb, research fellow at the S Rajaratnam School of International Studies, said that while larger countries can ban a foreign player and produce critical technology locally, the Republic faces more resource constraints.

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"Singapore's approach is to identify innate risks that accompany any technology we choose to bring in and to put in our own control measures (such as cybersecurity and encryption protocols), so long as the benefits presented by that technology continue to outweigh the risks and trade-offs," said Dr Ong-Webb.

Huawei, like its compatriot ZTE Corp, has come under pressure from the United States over claims that ties to Beijing make its technology a security concern. Western allies and other countries are either imposing or mulling over bans on using Huawei in upcoming critical 5G infrastructure.

Huawei's involvement in 5G thus became a geopolitical litmus test.

"Banning Huawei is a signal to Beijing that you fundamentally do not trust China in general," said Dr Ong-Webb, adding that Beijing could hit back by excluding anti-Huawei parties from Belt and Road projects or other government-linked contracts.

But "we cannot discount the high likelihood that the Trump administration will impose pressure and penalties against countries and firms that choose to do business with or collaborate with Huawei", he warned.

Still, Julber Osio, research associate at S&P Global Market Intelligence's Kagan research division, pointed out that Singapore's legacy network operators have engaged Huawei as a vendor in their 5G trials.

"All three, however, also engage with other vendors such as Ericsson and Nokia, so it looks like they all prefer to diversify their technology options for 5G," Mr Osio added.

Singtel group CEO Chua Sock Koong told a briefing last month that the telco takes a multi-vendor strategy: "We would make sure that when we are ready to call for a tender on 5G roll-out, we would invite the key industry equipment vendors to take part."

(For compliance, Singtel Australia unit Optus dropped Huawei from 5G plans, after Canberra banned Huawei from 5G infrastructure last year.)

Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye noted in a recent report that the intensifying scrutiny on Huawei "is causing some concern in a few countries", such as Malaysia and the Philippines, as well.

But "Asean will remain relatively open to Huawei's involvement despite US pressures", Ms Lee told BT, citing major communications technology investment in Cambodia, Myanmar, Laos, Vietnam and Thailand. "Governments in the region that are pushing towards digitalisation will likely be open to such collaboration."

She added: "Even US allies like New Zealand and Britain have recently backtracked on their harsh stance towards Huawei. Singapore will likely maintain its neutral stance and keep the diversification strategy to reduce its dependence on a single provider."

Separately, Fitch Solutions analysts, who expect global operators to cut costs for capital-intensive 5G deployment through network-sharing deals, said in a recent report that the concerns over Huawei equipment "could accelerate this trend further".

"Chinese technology is cheaper than that provided by Western manufacturers... and a ban on Huawei means even higher deployment costs for operators," they wrote.

"We expect more network-sharing partnerships in countries where either Huawei has already been banned... or where governments still have to take a final decision on the matter."