2014 is a significant year as it marks the 20th anniversary of the Suzhou Industrial Park. As a result of two decades of close cooperation between Singapore and China, Suzhou moves up the value chain, serving as a model for bilateral collaboration that has spread through Jiangsu, Zhejiang and Anhui provinces. Yao Minji reports.

Over the summer, the Suzhou Industrial Park (SIP) has become a favorite place for local children and those who visit the famous tourist city. Various types of events, such as a book fair, transformers carnival and kids fun expo, have added more color to the industrial park.

It’s an example of how much the area has changed. The China-Singapore collaborative effort long ago has moved from lower-end manufacturing and pure investment promotions to more sophisticated areas, such as modern services, sustainable development, financial cooperation and social governance, among many others.

Set up 20 years ago, the park is now a model of international cooperation and has become internationally famous for its rapid development, impressive even amid the Yangtze River Delta region, one of the country’s most mature areas.

The park is a reflection of Singapore’s ever-evolving collaboration with China over the past 24 years, during China’s dramatic social and economic progress, since diplomatic ties were established in 1990. Both countries will celebrate the 25th anniversary of the establishment of diplomatic relations next year.

Today is Singapore’s National Day. Ong Siew Gay, the country’s Consul-General in Shanghai, talks to Shanghai Daily about Singapore’s evolving relevance to China, future opportunities for cooperation in different fields and regions, and its plans to help both Singaporean and Chinese companies grab these opportunities.

“We’re a small country and we are very mindful that in order to survive and prosper in the region and in the world, we must continuously create relevance for Singapore, for other countries and for the international economy,” says Ong.

“It is particularly true for our relationship with China. We are looking forward to the 25th anniversary of the establishment of Singapore-China diplomatic relations next year. As China develops, her developmental needs change over time. The way we were relevant to China in 1994 has changed in 20 years. In each phase, we must continue to find new ways to engage in bilateral cooperation for mutual benefits.”

Offshore renminbi clearing center

One such new opportunity comes in finance, as China’s efforts to internationalize the yuan are welcomed by the growing demand from international markets looking for new spaces and financial products and services.

Two years ago when Ong first arrived in Shanghai, making Singapore an offshore renminbi clearing center was still at the discussion stage. In May 2013, the ICBC Singapore branch was designated as the RMB clearing bank. In March 2014, only 10 months later, yuan deposits in Singapore reached 220 billion yuan (US$35.61 billion), accounting for 60 percent of trade financing in RMB outside of China’s mainland and Hong Kong.

Six banks in Singapore have since issued RMB bonds, or Lion City Bonds, at a total of 7.5 billion yuan.

SIP, often a pilot zone for new policies, was made a test field for RMB cross-border financing in June this year. Companies registered in the park will now be able to raise RMB bonds in Singapore for the purpose of offshore financing, and they can borrow RMB from Singapore-registered banks for use within the industrial park.

“Financial cooperation between China and Singapore has become more important. It is a strong area for potential growth for both countries,” Ong says. “We recognize that financial liberalization is a very important aspect of China’s globalization, and we are very happy to be helping China in its drive to internationalize the RMB. We can create more innovative financial products and services that meet the demands of China’ further globalization.”

The Yangtze River Delta was where bilateral collaboration started and continues to remain strongest. Singapore has established seven regional councils across China, co-chaired by leaders from both countries, to steer regional cooperation. Two are in this area — in Jiangsu and Zhejiang provinces.

Even within this region, Ong sees new opportunities due to the different economic structure and markets.

“Jiangsu Province, where SIP is located, for us is a very mature and strong market,” he says. “Thirty-five percent of Singapore’s investment in China takes place within Jiangsu. It is largely because of the history of SIP, but things have gone beyond the city of Suzhou.”

As of the end of 2013, there were 3,870 Singapore projects in Jiangsu, with cumulative actual investment of US$23.25 billion, making it the province’s third-largest investor.

Singapore investors are very active in the region, Ong adds, and the SIP model has expanded to Suqian, Nantong and Xiangcheng, the southern parts of the province where both labor and markets are well developed. Some investors have also been slowly branching out to Subei, in the northern part of the province, where the conditions are gradually catching up, creating new opportunities with cheaper lands.

A preferred destination

“Zhejiang Province is very different,” Ong says. “It is a province dominated by privately owned enterprises, the POEs.”

He has observed a growing demand from these companies to venture beyond China, and Singapore is often a preferred destination, especially for companies venturing out for the first time and finding it useful to use Singapore as a regional base.

“Anhui Province is not yet as well known to Singapore investors. It is still developing, and we are optimistic that more companies will look to Anhui as business costs in coastal areas rise,” Ong says.

“It (Anhui) was the very first place SIP went beyond Jiangsu Province and it was a way to push some of the earlier manufacturing activities to places where land is more abundant. This creates more space for more high-value-added activities in mature areas, and it also helps less-developed regions to take over these activities and create local employment.”

“It will create space for Singapore’s own manufacturers to move beyond SIP and expand the Singapore brand name.”

“Shanghai is already very well-developed,” he says. “A lot of exchanges have taken place with local government departments despite the absence of a provincial council to steer cooperation.”

Shanghai is the third-largest recipient of Singapore’s foreign direct investment in China, after Jiangsu and Guangdong provinces, at 10 percent. And Singapore is Shanghai’s third-largest investor with more than 2,500 companies and over 3,600 projects, amounting to US$14.6 billion, as of the end of 2013.

Last year, bilateral trade rose 11 percent year-on-year to US$91.4 billion, among which US$12.1 billion came from Shanghai.

“It has the largest overseas Singapore community in China with about 7,000 Singaporeans, some 2,500 companies with over 3,600 projects,” Ong says. “Many Singaporean companies also set their China headquarters in Shanghai.

“All three major Singapore banks — DBS, OCBC and UOB — are already in the China (Shanghai) Pilot Free Trade Zone, and it will also create new opportunities for Singapore companies.”