Why Singapore trumped Rotterdam
May 2014 - I still remember the approach to Singapore’s Changi Airport from our stay in this Asian hub in 2007-2010. Since then, the skyline around the central business district or CBD has changed dramatically. Especially the developments around Marina Bay, which in seven years has seen a whole new district in Singapore emerge.
One thing that has remained the same, however, is the number of ships moored off the coast or en route to (Northern) Asia. 60,000 (!) freighters sail this route every year, one of the world’s most important transit routes and one that has been very important to Singapore. The location of this city state is one of the many reasons why it has been able to develop into a major hub at the mouth of the South China Sea.
In this blog, Jeroen Plag, Head of Client Coverage Asia, Americas & UK for ING, writes about his recent visit to Singapore and reflects on the growth of the city state into a major shipping hub in Asia. He observes how efficiently Singapore facilitates development with its pragmatic philosophy and compares this with his home city of Rotterdam, which is unable to maintain the same pace. Jeroen also gives a flavour of what regional CEOs in Asia are thinking, based on conversations with clients during his visit.
Another thing that hadn’t changed was the efficient manner in which customs formalities were dealt with. My passport was stamped within 10 minutes, and by the time I went to collect my luggage, it had nearly been removed from the belt! Changi Airport now has three terminals, with the fourth one on its way. There are even plans for a fifth one to handle all the passengers (more than 57 million in 2013). The temperature of 27-32°C is another constant, which means that you don’t walk as fast here as you would in NYC, otherwise you’d always be changing your shirt! The standard, refreshing, late afternoon rain shower makes everything that little more comfortable: 27°C. The lowest temperature ever recorded here is 19.4°C (in 1934), which is still pretty decent.
The aim of this trip was to visit both international and Dutch clients with regional offices in Singapore, as well as Singaporean clients that we serve from Asia and from Europe in particular. Europe remains an important destination for Asian clients, especially now that merger and acquisition activities continue to increase. But Africa is also very clearly in the picture. Earlier this month, Temasek, Singapore’s investment driver, announced a major investment in Nigeria, and they’re not alone.
We discussed the trends in Asia with the regional CEOs, and Indonesia and India both came up a lot. Although both countries are too large not to be included, they both continue to have challenging investment climates for companies. Hopefully, the upcoming presidential elections there will bring about some change. Reports about China and South Korea were more positive. China in particular was praised for its long-term policy and its ability to implement and achieve successive five-year plans. Singapore has the same long-term strategy, which was very evident from our tour of the port.
Coming from Rotterdam, the port of Rotterdam concerns me, or should I say: the position that we lost concerns me. While it took more than ten years in the Netherlands for a decision to be made about the second Maasvlakte, in Singapore it took less than two years for new ground to be reclaimed and a temporary container terminal to be built. Temporary because the plan is to transfer all container transloading from the district near CBD to the reclaimed artificial industrial island Tuas in the west. The space that this will create can then be used for new apartments to facilitate the growth of Singapore.
Incidentally, that increase in population – the final goal is 6.5 million compared to the current 5.5 million – is something you really notice in traffic. That journey to the airport which used to take no more than 30 minutes, now takes more than an hour, and that’s after the evening rush hour I’ll have you know. The smog coming from Indonesia has also worsened since the burning of the palm oil fields. In the past, this mainly caused a nuisance after the summer, but last June there was so much smog that Singaporeans had to wear masks. Something you’d normally associate with Beijing, not Singapore!
Pragmatism as a philosophy is how Robert Kaplan describes the management style of the Singaporean government in his recent book 'Asia's Cauldron', which is about the geopolitical situation around the South China Sea.
The above-mentioned developments of Changi Airport, the port and housing are all part of Singapore’s long-term plans. So too are the integrated resorts on Sentosa and in Marina Bay. Less than ten years ago, there was absolutely no space at all for casinos in Singapore. Now there are two very successful ones at the integrated resorts. In this case, of course, they’re not called casinos, but the pragmatic Singaporean tax office doesn’t care; both businesses are cash cows! In 2011, the casinos earned nearly as much as the Las Vegas Strip (6 billion dollars!), even though they only opened in 2010!
Follow Jeroen on Twitter: @JeroenPlag
Initially published by Dutch daily 'Het Financieele Dagblad', with permission re-published by ING.