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The Airport Economist
By Tim Harcourt
Allen & UnwinCopyright © 2008 Tim Harcourt
All rights reserved.
EVERYBODY LOVES RAYMOND
Why is Singapore more famous for its engineers than for its ballet dancers? What is the new Singaporean obsession with 'creativity'? The airport economist investigates.
There's no doubt about it, Singapore works. If you like order, cleanliness, intelligence and efficiency then you'll like Singapore. Singapore is not very big — just a city on an island, really — but as a regional economic player in Southeast Asia and beyond it has done very well on all counts. The city-state has transformed itself from a relatively poor nation in the 1960s to an affluent, service-based economy with living standards at OECD levels — well ahead of most of its Southeast Asian neighbours. Singapore has almost become a 'Switzerland of Asia', with its strengths in international banking and finance.
So what is the reason for Singapore's success? One is education. Singaporeans are just so damn smart. In fact, the airport economist himself is a beneficiary of the Singapore brain-fest. When I was studying economics at the University of Adelaide, most of the students in the year ahead of me were from Singapore or Malaysia. They were literally my neighbours, too, as we shared a dorm corridor in a residential college. All this happened by chance as this group of students — some of Singapore's best and brightest — were meant to go to Oxford to study nuclear physics and become rocket scientists, but a glitch in Singapore's otherwise near perfect education allocation-cum-manpower planning system meant they ended up in Adelaide studying economics with me.
This mix-up had two consequences, the first immediate, the second more long-term in nature.
The first consequence was that I was suddenly surrounded by all this brainpower, particularly in quantitative, technical subjects like mathematics, statistics and econometrics. Accordingly, my grades in these difficult subjects were greatly enhanced thanks to my Singaporean classmates/corridor neighbours. Economists often talk about 'externalities' or 'spillovers', which refers to a private action having social consequences which are not factored in to the original decision. Usually spillovers are negative, such as when a private factory pollutes a river (which causes social costs not accounted for in the initial commercial decision). However, there can be positive externalities or spillovers too. In this case, the Singaporeans' talents at mathematical economics 'spilled over' into my orbit as they helped me to understand the difficult techniques required to excel at the coursework.
Fortunately, there were 'gains from trade' to be had. Economists also often talk about 'comparative advantage'. The theory goes that if you are relatively good at something you should trade with the person who is relatively good at something else. It works for nations as well as people. So when it came to writing economic essays — particularly of thesis length — I was able to help my classmates and pay them back for the help they gave me with quantitative methods.
The second consequence came to light many years after we all graduated. Over time, all these talented Singaporeans have ended up back home running the place. Adelaide has made its mark on Singaporean public life — at the highest levels.
Probably the most famous example from my university days is Raymond Lim, a new young gun in the Singaporean government. Lim has held a number of high-level portfolios including Minister for Transport, Minister for Trade and Industry, and Minister for Foreign Affairs. Like his namesake from the Grammy-winning US television series Everybody Loves Raymond, Lim is clearly a man to watch in business and political circles in the city-state. One of the 'magnificent seven' (a group of seven emerging politicians hand-picked by then Prime Minister Goh Chok Tong), Lim is responsible for ensuring that Singapore remains competitive and innovative in the post-industrial age. When the airport economist met Lim at his office in Singapore, he was upbeat about his country's prospects. 'We are keen to nurture our creative industries and encourage innovation in the new Singapore,' he explained. 'Singapore is a high-income, mature economy with many knowledge-based industries. In this environment, our best chance is to encourage building our own human capital, support local entrepreneurship and to encourage other countries' businesses to base themselves here in Singapore.'
One example of the 'incubator' approach is Singapore's Torch Centre, a base for 25,000 small- and medium-sized enterprises (SMEs) from China. The Torch Centre provides a launch pad for SME internationalisation to the rest of Southeast Asia and beyond. Lim says foreign ownership is not an issue in an entrepot economy like Singapore: 'We don't mind if they're not Singapore-owned, we just want them to be Singapore-based.' It is hoped that, once again, Singapore can use its comparative advantage to great effect: without vast land, natural resources or a large population, the city-state has had to use its knowledge and capacity to be an international business hub to succeed. I guess it has got to be said that Singapore has a pretty good track record on this score, so the incubator approach should help the city-state to continue its winning streak well into the future.
So that's the good news. There's no doubt that Singapore is efficient and clean and its citizens are, on average, highly intelligent and well-educated, but there is something missing. What happens when a nation can produce lots of engineers but very few ballet dancers, or plenty of world-class superannuation fund managers but few artists or novelists? Well, to be frank, it becomes just a little bit dull. In short, Singapore needs a bit of livening up on the creative front, some left-brain stuff to go with its already impressive, almost exploding, right-brain achievements.
That's what Raymond Lim told me that he and his generation of hot-shot legislators wanted to change about their island home. Lim wants Singaporeans to unleash their creativity on the world (or at least on each other in the first instance).
They certainly have been trying. Singapore's 'renaissance' in arts and culture is symbolised by the new durian-shaped concert hall seen as you drive into town from Changi Airport. To the uninitiated, the durian (Singapore's national fruit) has a most unusual smell but a fabulous taste. It also has an important symbolic place in the Singaporean heart, so while Sydney has its eggshell-shaped Opera House, Singapore has its durian.
In multimedia, too, Singapore's creative industries have made some progress. For example, Lim is very proud of the fact that in a global competition to develop documentaries for the National Geographic channel in Asia, six out of the ten winners were Singapore-based.
However, despite these promising signs, there's something funny going on. The creativity campaign, like all things Singaporean, seems very systematic and planned. For instance, a number of government buildings display 'Be Creative' banners in their foyers and there's even talk of having all Singaporeans attend mandatory creativity classes on Saturday morning, from 10am to 11.30am sharp. Sure, there's plenty of evidence that creativity can have economic benefits as economist Richard Florida showed in his seminal book, The Rise of the Creative Class. And how it's transforming work, leisure and everyday life about US cities with a high proportion of creative industry workers or 'creative classes' (as well as ethnically diverse and gay populations). But can creativity be, well, 'created' by a government regulation? It remains to be seen.
In any case, whether legislated or not, Singapore's creativity drive is creating some unique opportunities for Australia which, as a nation of sports junkies, actually does very well on the creative exports side. For instance, the Sydney-based Bell Shakespeare Company has brought drama education to Singapore. Company founder and national treasure John Bell sees Singapore and Shanghai as the focal points for Bell Shakespeare's mission to bring Shakespearean method to Asian students with an Australian style. 'Drama is about performance, but also training and education. We have had great success in helping budding Singaporean actors learn about theatre. It has been a great education for us as well,' Bell explains. As a result of Bell Shakespeare's foray into the drama market, Singapore may well become a land fit for thespians.
Creativity is the latest injection into Australia's economic relationship with Singapore, which had mainly been based on services, including in professional areas such as architecture, financial services and education.
Architectural design is an important area for Australian services exporters in Asia, and Singapore has been a great launching pad. In fact, despite all the so-called arts versus sports debates that we have in Australia, there are examples where sport has actually helped creative exports — especially in the case of design. Take the example of the Sydney-based architectural firm Woodhead. In 2000 the firm's principals were seated next to several Singapore Airlines executives at the Sydney Olympics as part of the Business Club Australia (BCA) programme (a sort of matchmaking club for exporters set around major sporting events). As a result of this meeting, Woodhead won two major contracts. The first was to design the interiors at Changi Airport's Terminal 3, which houses Singapore Airlines — a project estimated to have been worth around S$1.4 billion (A$1.35 billion). The second project was the design of the interiors at Singapore's National Library (worth around S$230 million or A$222 million). This is big bickies for an architectural firm.
Even though Woodhead has been in business since 1927, it has only just been able to enter global markets. According to Woodhead's principal, Robert Hopton, whom the airport economist actually met in a taxi queue at the airport, the Singapore deals have enabled the firm — now known as Woodhead International — to break into Thailand, Malaysia, India, Nepal and, of course, China. One reason for its success has been its professional openness to sharing knowledge. As Robert Hopton explains: 'Success begets success. Our willingness to partner with others and share information has been one of our greatest assets. It is an excellent way of growing new opportunities and building your capacity to enter new markets.' Instead of keeping all the knowledge close to its chest, the firm practised the principle of 'share and share alike' with its business partners and received a positive response and a return flow of information.
Woodhead International is just the sort of Australian professional services company that has benefited from the Singapore–Australia Free Trade Agreement (SAFTA), the first bilateral trade agreement for Australia since the conclusion of the Australia–New Zealand Closer Economic Relations (CER) agreement over two decades ago. Before SAFTA, foreign architects had to run their plans through the offices of the Singapore government architect, which meant delays and frustratingly slow business as a result. Under SAFTA, an Aussie architect is treated like a local, so it is more of a level playing field. According to Hopton, 'Getting a foothold in Singapore really helped us take off in Asia. And it was all thanks to those Austrade networking functions at the Sydney Olympics.'
Education is another area that has really benefited from closer Australian–Singaporean business links. After SAFTA was signed, Sean Riley, Australia's Senior Trade Commissioner in Singapore, was able to develop strong links with every major education exporter in town. 'We have Macquarie Graduate School of Management which has signed a deal with Raffles Campus, part of the Singapore Technologies group; the University of South Australia has run a strong advertising campaign in the Straits Times; and we recently had the Queensland University of Technology through. Vice chancellors are some of our more regular exporter visitors to the region,' he observed at the time. In addition, whilst the University of New South Wales (UNSW) has recently annouced that it will not be building its campus at Changi in Singapore due to issues concerning exposure to high levels of risk, it plans to deepen its existing partnerships with the National University of Singapore, Nanyang Technological University and several leading Singapore polytechnics. According to Pro Vice-Chancellor (International) Jennie Lang, the UNSW's links with Singapore are an important part of its strengthening Asia-Pacific strategy. 'We are building on long-term partnerships that have been developing for one to two decades now with our partner universities and polytechnics such as Singapore Polytechnic, Nanyang Polytechnic, Temasek Polytechnic and Ngee Ann Polytechnic, and increasing our involvement with our growing alumni chapters in Singapore and other parts of Asia. We plan to have a growing presence throughout the Southeast Asian region supported by our permanent UNSW office network in Asia (including China and India) where we are strengthening our connections and our brand.'
Sean Riley also observes that education overall is one of the professional services areas that will benefit from SAFTA well into the future. 'Our skill base, common language and close ties among young professionals will put us in a good position,' he said. In fact, Sean Riley, on a visit to Australia to publicise the importance of the Singapore market after the SARS outbreak, nominated education (both university and vocational), legal services, finance and architectural services as the SAFTA big winners from an Australian point of view.
Actually, education is a good note to finish on. With many of Singapore's government and business elite educated at Australian universities, the education export push from SAFTA will sow the seeds for stronger economic ties between Australia and Singapore in the future. As Raymond Lim himself points out: 'I am not the only Australian graduate around. Peter Ong, the permanent secretary of the Ministry of Transport, studied economics at the University of Adelaide as did Chia Tai Tee, one of the leading lights of the Government of Singapore Investment Corporation [GIC]. They call us the Adelaide mafia.' It wasn't just guys either. In fact, Lim Soo Hoon, the permanent secretary of the Public Service Division and Singapore's 'Woman of the Year' in 2006, was another Adelaide economics graduate. So educating Raymond and his colleagues in Australia has paid big dividends and people links will continue to prosper.
But maybe Singapore — and its famous Adelaide graduates — can let creativity bloom in a natural fashion, just like in the fair city of Adelaide. In the 1970s, South Australia's flamboyant and socially progressive premier Don Dunstan set up the Adelaide Festival of Arts and other cultural activities in the airport economist's home town. Despite its small size, Adelaide became a pacesetter for the rest of the nation, and its festivals and creative events (like the famous Fringe Festival) attracted international attention and have since been exported to other cities wanting their creative life to flourish. No creativity classes were needed then nor any elaborate plans or social engineering. After all, building a creative economy isn't rocket science.CHAPTER 2
LOVE THY NEIGHBOUR? LIVING WITH ASEAN
As they used to say on Sesame Street, 'Who are the people in your neighbourhood?' In Australia's case it's the Pacific nations, New Zealand, Papua New Guinea and the Association of Southeast Asian Nations (ASEAN). In fact, Australia and New Zealand are each currently negotiating a free trade agreement with the ASEAN states. So who makes up this region of ten countries and 550 million plus people? And how important are they to Australia? The airport economist investigates.
In between one of Asean's richest members, Singapore, and one of its poorest, Vietnam, the airport economist decided to take a look at the 'middle income' developing countries of ASEAN. Many of these countries were hit hard by the Asian financial crisis in 1997–99 and the dotcom crash of 2001, so seeing how they were faring on their roads to recovery and on their aspirational journeys to join the ranks of the richer countries of Asia seemed a good idea.
But first, a bit of history. ASEAN was formed in 1967 by Singapore, Malaysia, Thailand, Indonesia and the Philippines. The original ASEAN-5 were later joined by Brunei, Vietnam, Laos, Cambodia and Burma to make double figures. Whilst originally a defence pact, ASEAN has grown to become an important regional grouping on economic, trade, defence, security and development issues. ASEAN is very important to Australia as, according to Austrade research, over one-third of Australia's 44,000 exporters sell to ASEAN nations. In fact, ASEAN is likely to become even more important to Australia as a regional free trade area between Australia and New Zealand (through the Closer Economic Relations (CER) agreement) and ASEAN is currently being negotiated. This is big news as the ASEAN door has been shut to Australia in the past. A link with the ASEAN bloc would be significant as the region's GDP itself is worth almost US$862 billion (A$1150 billion), and the association has already announced deals with China (to be phased in by 2010) and Japan (by 2012). In fact, if a CER–ASEAN regional area was created through ASEAN's other expanded agreements, by 2026 we could see a regional trade area stemming from Hokkaido in northern Japan all the way south to Invercargill on the last bus stop to the South Pole.
Excerpted from The Airport Economist by Tim Harcourt. Copyright © 2008 Tim Harcourt. Excerpted by permission of Allen & Unwin.
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Table of Contents
1 Everybody loves Raymond,
2 Love thy neighbour? Living with ASEAN,
3 Motorcycle diaries,
4 Shanghai of the tiger,
5 Lost in translation,
6 Switched on in Seoul,
7 Mumbai be right, I may be crazy,
THE MIDDLE EAST AND AFRICA,
8 Sheikh, model and mall,
9 Prosperous on the Bosphorus,
10 Tim Tams to Tel Aviv,
11 Free (trade) Nelson Mandela,
12 Pushkin meets Pitjantjatjara,
13 A chip off the old bloc?,
14 The Italian job,
15 Berets, baguettes and board shorts,
16 A tale of two World Cups,
17 The Kylie effect,
18 All the way with the USA?,
19 Blame it on Rio,
20 Don't buy from me, Argentina,
21 Red hot Chile,
22 Bringing it all home to Kath & Kim,
Conclusion — the airport economist's Ten Commandments,
The airport economist's useful websites in trade and economics,
The A to Z of exporting,