On marriage, mergers and the dangers facing the
PAP
MR NGIAM TONG DOW, (right) former permanent secretary and currently
corporate adviser to Temasek Holdings, was keynote speaker at the
Japanese Chamber of Commerce and Industry luncheon last week. The
Q&A session included discussions on Singapore's changing
economic strategies and new political styles:
SUPPOSING you were to start your career all over again, doing the
same job you were given in the 1960s or 1970s, do you think you
would be as successful today in drawing another Maruzen Toyo or
Sumitomo Chemical to Singapore?
The economic landscape for Singapore, as for the whole world, has
changed. The World Trade Organisation (WTO) has ushered in a new
era of global knowledge-based competition.
In the 1960s, Singapore was one of a few developing countries that
went out of their way to welcome foreign direct investment. Today,
every country welcomes foreign direct investment. Under the WTO
rules, all countries compete on equal terms. Being a small country,
a mini-state, Singapore has learnt to compete globally. The rise of
China, and soon India, has unleashed a seismic shock on Singapore
and other Third World countries.
Though Singapore is said to have gone from a Third to First World
country, the fundamentals of competition remain the same. These are
political and social stability, rising levels of education, high
rates of savings, hard work without a five-day week, thirst for
knowledge, daring and drive.
If Singapore continues to have these qualities, we will continue to
attract new industries; the Maruzen Toyos and the Sumitomo
Chemicals of a new age.
You suggested that the Monetary Authority of Singapore's (MAS)
effort to consolidate the local banks is misguided. Can Singapore
accommodate more than two local banking groups when in Japan we
would virtually be down to only three major banking groups
soon?
In banking, as in any other field of enterprise, skills count more
than scale. In fact, McKinsey, the management consulting firm, has
advised a Singapore bank of which I was a director, that a bank
must first skill up before it can scale up. In other words, people
count more than size.
Back-room operations can be scaled up easily, but not business
relationships, which have to be built up by real people.
I am a believer in growing our own timber, not in transplanting
trees through acquisitions.
Cast your mind back to the front covers of Fortune magazine in the
1970s, which featured the stars of expansion through acquisition.
Where are the conglomerates of yesteryear?<
Mergers, like marriages, will take place when both parties find a
fit. It should not be driven by regulators or investment banks. The
fees paid by Singapore banks involved in bank mergers around 2000
easily amounted to over US$100 million (S$170 million). This is the
cost of what I consider to be MAS' mistaken policy on merging
Singapore banks.
Have our banks become more profitable? More efficient? More
effective? It has only led to a saturated, riskier mortgage housing
loans market.
As business people operating in Singapore, we face a dual
challenge. On the one hand, we want our head offices to bring more
business to Singapore. On the other hand, there seem to be fewer
business opportunities in Singapore now than in other countries. If
you were in our position, what would you do?
This is really a question for the chief executive officers of
multinational corporations and small and medium enterprises to
answer.
One way to start is to identify the markets or market niches that
Singapore is best placed to serve. Is it experienced manpower,
logistics or financing? What is the unique asset that Singapore
has, or can be found in Singapore?
I know of a Singapore company that has invested successfully in
fruit farms in northern China. This company has been able to
consolidate small peasant farms into a large-scale operation by
providing central marketing, purchase of fertilisers and packing
material, and research into better root stock. Most important of
all, it provides the individual farmer tending his lot with the
incentive to produce both in quantity and quality. The central
company guarantees to purchase the out put at predetermined
prices.
Singapore entrepreneurs and their foreign partners have to search
long and hard for a workable business model. The Government can
only point the way. The individual has to find the route.
Now that you're no longer involved in day-to-day government
decisions, do you see government policies differently?
Yes and no. Government is good at setting macro-economic policies,
but is quite hopeless when it comes to the nitty-gritty, which is
what business is all about. The Government should resist the
temptation to micro-manage the economy. For instance, it should
leave banking to bankers.
Supposing you have a choice to be a Japanese Administrative
Vice-Minister or a Singapore Permanent Secretary, which would you
choose and why?
I have never worked in Japan's Ministry of Trade and Industry, so I
do not know what (they) do or do not do.
My brief acquaintance with them shows that the Japanese
Administrative Vice-Minister and the Singapore Permanent Secretary
share one common overriding value, which is to serve our country
with all our might and soul. We believe passionately in the
progress and prosperity of our nation.
You have worked under two different prime ministers, namely
Minister Mentor Lee Kuan Yew and Senior Minister Goh Chok Tong.
Please elaborate on their styles and characters.
Yes, I have had the privilege of serving under prime ministers Lee
Kuan Yew and Goh Chok Tong. I can tell you that their hearts beat
strongly for Singapore.
About elitism, what is your personal assessment of Singapore's new
generation of leaders?
As I will be saying elsewhere, only the People's Action Party (PAP)
can defeat itself. The two greatest dangers for the PAP, which has
governed Singapore since 1959, are complacency and elitism.
By complacency, I mean flying on auto-pilot. Elitism means setting
the national agenda only through the eyes and perspective of the
upper middle-class educated elite.
Fortunately, the incoming Government, under Prime Minister Lee
Hsien Loong, is learning to set policies by the pulse of the
Housing Board heartlands. The recent changes in our baby policies
is an example of leading with the heart rather than the head.