Singapore – Picture B.C.’s population (plus another million) living on land roughly a quarter the size of Metro Vancouver. Swap out the logos of Telus and TD on downtown buildings for Chevron, HSBC and Citi gracing towers one and a half times as high.
Replace North America’s top airport, Vancouver International Airport, with the best in the world; a port that handled more than 10 times the Port of Vancouver’s container traffic in 2017; and a tourism economy that welcomed 17.4 million visitors in 2017 – 69% higher than Vancouver’s record-breaking 10.3 million last year.
In just over five decades since independence, Singapore has emerged as a regional economic and global financial powerhouse, ruled by what some call an “autocratic democracy,” and what many argue has been a steadfast determination to attract business, cement its place in Southeast Asia and stand on its own, despite geographic and resource constraints.
By the numbers, it’s not an apples-to-apples comparison, looking from Vancouver to Singapore. The latter is a city-state; the former isn’t a financial capital.
But as North American companies and countries chase growth, they will undoubtedly look to Asia – for customers, partners and products – and that journey will likely take them through one gateway to Asia, to the other.
“I think it’s been hard in Canada to see that Asia really does represent an important market as a whole and to recognize that Canadian futures depend on being better tied into Asia and the Asian growth story,” said Deborah Elms, executive director of the Singapore-based Asian Trade Centre.
“For us, the TPP [Trans-Pacific Partnership] remains the most important trade agreement that we’ve had globally in 20 years since NAFTA [North American Free Trade Agreement] was originally negotiated.”
The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement, once ratified, will formally establish trade ties between Canada and five Asian economies, four of which are in Southeast Asia.
Within and outside of the agreement, Canadian diplomats, trade representatives and companies with experience in Southeast Asia largely agree that Singapore is a predictable, steady and business-savvy place to base operations; a common-law ruled cosmopolis in a challenging, unpredictable and complex region grappling with a suite of issues ranging from corruption and terrorism to poverty.
“For a lot of Canadian companies thinking about expanding to this part of the world, Asia would be a growth market, Southeast Asia being a location, and Singapore can be a good, if you like, first space,” said Lim Kok Kiang, assistant managing director of the Singapore Economic Development Board.
That is entirely by design – and a half-century of nation-building economic policy, with serious investment in infrastructure, transportation and technology.
After New Zealand, Singapore is today ranked as the top destination for ease of doing business by the World Bank, with some of the highest marks for starting a business, enforcing contracts (Singapore ranks second whereas Canada stands at 114 out of 190) and paying taxes. The corporate tax rate is set at 17% and accompanied by a variety of incentive rates and rebates for companies, startups and holding companies.
Foreign work permit requirements and cost of living pose real challenges for international businesses, as does the time zone difference for Canadian firms and the region’s multiculturalism. As in Hong Kong, costs, particularly for housing, reflect the price of wanting to be where the corporate and financial world has chosen to set up in Asia.
Multinationals benefit from incentives, location, a skilled workforce and Singapore’s expertise in manufacturing and technology. On the other side, the country – an island with no natural fresh water supply and limited space for agriculture – benefits too from global expertise and partnerships that choose to settle within its borders.
“CN is basically working with some of the fastest growing customers in Singapore who are making decisions for products moving from Halifax to Turkey,” explained Rohan Belliappa, CN Rail (TSX:CNR) and CN Worldwide Supply Chain Solutions’ representative in Singapore, and president of the Canadian Chamber of Commerce in Singapore.
Belliappa makes up 100% of CN’s team in Singapore, the world’s busiest transshipment hub. Of all shipping containers that stop in one destination before reaching another, nearly one in seven pass through Singapore. From a trade perspective and business perspective, and as the owner of the largest railroad in Canada and the U.S., CN wanted boots – even just a single pair – on the ground in Singapore.
“We’re speaking to people in Singapore to make decisions with freight in North America,” added Belliappa.
It’s Singapore’s position, and not necessarily Singapore itself, that makes it an attractive destination for Canadian firms. While it’s a more mature market, it immediately serves a Southeast Asian region of 650 million, with a growing middle class.
For example, Export Development Canada (EDC) last year chose Singapore for its first global corporate branch. It manages all of the organization’s financing transactions for the region, from Australia to India and China.
“It’s beaten the business case that we put forward for the branch in terms of the volumes that we have from the market. So we’re very pleased,” said Bill Brown, regional vice-president of Asia at EDC. “This part of the world leads the growth, the global growth, and probably will for the next 20 years.”
“There is a message to pass on here about Canada and about Alberta and about Western Canada, because Australia is right next door, and New Zealand is right there supplying a lot of the food products,” said Rob Simmons, Singapore-based managing director of Southeast Asia and Oceania for Alberta’s Ministry of International and Intergovernmental Relations.
B.C. opened its third trade and investment office for Southeast Asia in Singapore earlier this year, a few years behind Alberta. When explaining market opportunities to companies back home, Simmons uses a Canadian analogy.
“China and India are the big cream donuts that everyone looks at and says, ‘Wow, love to have that.’ Southeast Asia is the Timbits. You get a box of them,” he said.
According to Canada West Foundation research, western Canadian sectors that stand to benefit from Southeast Asian opportunities under the CPTPP include agriculture, processed foods, and machinery and equipment. Elms, at the Asian Trade Centre, sees a significant opportunity for Canadian services, and firms specializing in waste-water management.
“In Southeast Asia you can pick the right entry point. It’s not quite as overwhelming,” said Simmons. “You can pick your spot, something like eating a Timbit, and then get settled in the market, and gradually expand, and then take on the big cream donut later on. •
Hayley Woodin’s work in Singapore and Southeast Asia is supported by an Asia Pacific Foundation of Canada media fellowship for 2017-18.