Singapore, HK connect the region and the world

Singapore and Hong Kong have often been portrayed in the media as rivals. The media likes to play up the competition between the two cities in various global rankings, as we compete for top spots as financial centers, aviation hubs and investment destinations. It is as if one city’s gain is the other’s loss, and both are locked in a zero-sum competition.

But the reality is quite different. Under the radar, both cities learn quietly from each other. We draw inspiration from each other’s successes, picking up finer points from each other as case studies when we engage in policy planning in areas like housing and urban development, transport infrastructure and heritage preservation. When one city encounters a problem, it looks instinctively at the other to see how the same problem is being addressed. Singapore admires Hong Kong for its MTR network and the reliability of its rail system, creative use of underground spaces, dynamic arts and cultural scene, and the energy and buzz of its financial sector. Hong Kong admires Singapore for its affordable public-housing program, healthcare, and education system. Even in areas where we compete, we keep each other on our toes, driving ourselves to do better. The two civil services engage in an institutionalized exchange program, under which the permanent secretaries visit one another for regular dialogue.

The similarities are endless. Both are comparable in size — Hong Kong is slightly larger at 1,100 square kilometers and 7.5 million in population, while Singapore stands at some 700 sq km and 5.5 million in population. Both have hardly any natural resources, except for a strategic geographical location, and a hungry and hardworking people with immigrant roots. Both were products of British colonialism, serving as outposts of the British Empire in the Far East. Both enjoy strong public institutions, like an efficient civil service, independent judiciary and the rule of law, with English as the working language.

There are also important differences. Hong Kong is largely a service-based economy, with the property, financial, legal and modern-services sectors as its pillars. Singapore has a more diversified economic structure that includes both services and manufacturing as sources of employment. Singapore and Hong Kong strike different balances between the role of the state and the market. Hong Kong, particularly under British colonial rule, emphasized “positive non-interventionism”, eschewing heavy governmental involvement in the free market. In Singapore, the government plays a more important role in the market and engages in regular dialogue with the corporate sector to formulate policies to guide long-term economic restructuring.

Most importantly, however, both cities share a similar global outlook. As small Asian cities in a dynamic region, we seek to secure our long-term future by binding ourselves to the region and the global economy as key nodes to the grid of capital, technology, markets, talent and ideas. Both cities realize that to survive and prosper, we need to remain relevant to other bigger players in the broader region.

That is why we are glad to see Hong Kong regain its footing after two difficult years. As Singapore Prime Minister Lee Hsien Loong said recently at the Bloomberg New Economy Forum in Singapore, “Overall, I have no doubt that Singapore is much better off if Hong Kong is prospering and we do business with them and compete with them.”

As Hong Kong leaves behind the political turbulence of 2019, it is also making the strategic choice to seek further integration with the Chinese mainland through the 14th Five-Year Plan (2021-25) and the Guangdong-Hong Kong-Macao Greater Bay Area.

The proposed Northern Metropolis will be a game changer in this endeavor. Covering 300 sq km — half the size of Singapore — and providing accommodation for almost 1 million households, this mega project is not just about resolving Hong Kong’s public housing challenge, although that is important. Rather, it is also intended to diversify Hong Kong’s economic structure, which has been heavily dependent on the financial and modern-services sector, toward generating employment and growth from the IT and startups sector and in advanced manufacturing. It is also a game changer in terms of positioning the government and civil service for a more active role in economic planning and social policies. The objective is to use Hong Kong’s hub role to tap on the enormous economic energies of the Greater Bay Area through further integration.

In this new chapter, there is great potential to deepen cooperation between Singapore and Hong Kong. With Hong Kong serving as the key node for the Greater Bay Area and the mainland, and Singapore as the hub for South and Southeast Asia, both cities are well positioned to facilitate the growing trade and investment links in the entire region.

The potential is immense. The Greater Bay Area boasts a population of 87 million people and a $1.7 trillion economy. This puts it in the ranks of South Korea, Canada or Australia in international GDP rankings. If it were a country, the Greater Bay Area would be the seventh-richest country in the world.

On its part, ASEAN has a population of 660 million people, and a growing middle class expected to grow from 24 percent today to 51 percent in 2030 (from 135 million to 334 million people). ASEAN enjoys strong economic ties with the mainland. China has been ASEAN’s largest trading partner for the past 12 years, while ASEAN overtook the EU to become China’s top trading partner in 2020. In the first half of 2021, ASEAN-China trade increased by 38.2 percent year-on-year to $410.75 billion, accounting for nearly 15 percent of China’s foreign trade. In 2020, China’s direct investment in ASEAN reached $14.36 billion, an increase of 52.1 percent.

ASEAN is also Hong Kong’s second-largest trading partner, supplier of goods and market for Hong Kong goods after the mainland. Despite the pandemic, the value of bilateral trade in goods in the first half of 2021 increased by 21 percent compared with the same period in 2020, reaching HK$589.7 billion ($75.60 billion). ASEAN was the sixth-largest source of external investment in Hong Kong in 2019, with inward direct investment amounting to HK$560 billion.

ASEAN is in the center of an evolving regional economic architecture. Aware of its potential, Hong Kong earlier negotiated the ASEAN-Hong Kong Free Trade Agreement, and has now set its sights on joining the Regional Comprehensive Economic Partnership. The RCEP promises to be the largest FTA in the world, covering some 30 percent of the global population, trade and GDP. At a time when multilateralism and globalization are under stress, the trade pact demonstrates regional countries’ support for open and connected supply chains, free trade and greater interdependence.

Seeking multiple pathways to bolster the rules-based multilateral order has always been in Singapore’s DNA as a country. For a small and open economy like Singapore, free trade and globalization is not just a debating point but an existential issue of life and death. Singapore has therefore been at the forefront of the evolving regional architecture. Apart from RCEP, Singapore and like-minded partners came together to establish the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The CPTPP pioneered commitment to higher standards in emerging areas like e-commerce and intellectual property rights, and the interest from other economies to join has catalyzed momentum toward further liberalization of trade and investment.

Digital trade has also become a new source of economic growth. To advance collaboration in harmonizing standards, enabling trusted flows of data, and allowing seamless cross-border transactions, Singapore, Chile, and New Zealand came together to establish the Digital Economy Partnership Agreement. It is noteworthy that China had recently applied to join the CPTPP and DEPA, and trading hubs like Hong Kong stand to benefit significantly from its participation.

In sum, Singapore has a strong value proposition as Hong Kong’s partner of choice. We are the key trading, financial, aviation and shipping hub in Southeast Asia, a role similar to that which Hong Kong plays in Northeast Asia. We have strong economic ties with the region, as well as other global players in Europe and America. We have assembled a dense network of free trade agreements with all major economies, including the US, China, India, the EU, and ASEAN. We are also among the keenest advocates of, and now party to the RCEP and CPTPP. We are culturally familiar with South and Southeast Asia.

In this new and exciting journey, many vistas of cooperation will emerge between Singapore and Hong Kong. By working closely with each other and having a good understanding of each other’s role in the respective regions, Singapore and Hong Kong stand to reap tremendous benefits for each other and others around us.

The author is Consul General of the Republic of Singapore in Hong Kong.

The views do not necessarily reflect those of China Daily.