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S'pore eyes bigger share of pie in Guangdong economic zones
Publication Date : 26-08-2013
Singaporean companies are making inroads into Guangdong's triangle of new special economic zones (SEZs), touted as being key to the restructuring process there.
DBS Bank (Hong Kong) this month became the first Singapore bank given the green light to make cross-border yuan loans to firms in Qianhai, China's testing ground for currency convertibility.
In Hengqin, planners from RSP, led by Liu Thai Ker, are conceptualising its city masterplan, including the creation of a recreation strip "the size of Las Vegas".
Meanwhile, CapitaLand has snared a residential project in Nansha, which is gunning for high-tech manufacturing.
But so far, just three companies are in the three zones. And Singapore is keen to gain an "advantageous position" so that more of its companies can partake in what Transport Minister Lui Tuck Yew calls "exciting developments" in China.
In exchange, Singapore can be a partner in helping Guangdong continue in its role as a reformer - this time, in social issues, said Lui, who co-chairs the Singapore-Guangdong Collaboration Council, a platform for deepening ties between the two.
"China has always looked to Guangdong as a forerunner of economic development and reform. Increasingly, it will be looking to all these (new) cities for the transformation of social management."
Areas of concern range from health care to sustainable environment to narrowing the income gap - issues that affect top cities, said Lui.
On how Singapore might offer advice, he said it would "depend to some extent on the benefits we get in return".
"We hope they fully understand our strengths, and as we understand the development of these new zones, we'd like to be in an advantageous position so Singapore firms can benefit."
Lui was wrapping up a trip to Guangdong last week during which he visited the trio of new SEZs - still mostly under construction but backed up by 3-D presentations and high hopes.
The zones were selected by China's Cabinet to experiment with preferential policies such as lower corporate taxes (15 per cent versus 25 per cent elsewhere in mainland China), and legal and accounting systems adapted from those in Hong Kong and even Singapore.
In particular, the liberalisation of capital controls in Qianhai is being closely watched by banks and financial institutions that want to be in pole position when China fully liberalises its currency.
Nevertheless, businesses in Hong Kong and Macau get preferential treatment. For instance, banks such as DBS must first be based in Hong Kong to extend cross-border yuan loans to firms in Qianhai. The same goes for professionals such as lawyers and accountants who want to set up shop there.
Qianhai SEZ's No. 2 official Zhou Yi You said it is open to the idea of allowing Singapore-based banks to move into Qianhai "if the central government agrees".
On whether the Singapore government will then approach Beijing on this matter, Lui said it would be best to first understand Beijing's plans for the new zones.
For instance, one question mark lies over how tightly the authorities will control the use of loans outside Qianhai. Another lies over the extent to which the legal system will offer certainty in terms of financial transactions.
"Supportive policies in the legal framework and the scope of loan usage will be crucial to Qianhai's success," said Tan Teck Long, managing director and head of the institutional banking group for DBS Bank (China).
If these issues can be ironed out, Qianhai holds enormous potential to "help shape China's financial policies".