Mr Lim Hng Kiang at the Indian High Commission Seminar, 23 Mar 2010

SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE INDIAN HIGH COMMISSION SEMINAR ON “OPPORTUNITIES IN THE SEZ SECTOR IN INDIA” ON TUESDAY, 23 MARCH 2010, 9.00AM, AT THE SHANGRI-LA HOTEL SINGAPORE, JURONG BALLROOM

HE Dr T C A Raghavan, High Commissioner of India in Singapore

Mr Raj Kumar Khatri, Commissioner, Department of Industrial Development, Government of Karnataka

Distinguished Guests

Ladies and Gentlemen

Introduction

It is my pleasure to address you today. Let me begin by first extending a warm welcome to the senior officials from the Central and State governments of India as well as Special Economic Zone (SEZ) operators and businessmen who have travelled from India to share with us developments in the SEZ sector. It is not often that we have such a gathering and I think we should take full advantage of the luminaries we have in the room today. This seminar has also come at an opportune time, with the global economy and foreign direct investment (FDI) flows into Asia on the mend.

Singapore’s experience with SEZs

SEZs have garnered much attention for contributing to economic growth by driving exports and creating employment. This is largely due to the success of the Chinese SEZs which have transformed China into the world’s premier manufacturing hub. The SEZ model has been replicated in many places, though with varying success. Singapore too has had its fair share of experiences with SEZs, having been involved in developing industrial spaces in Asia since the 1990s, notably the SuzhouIndustrial Park in China, the Vietnam-SingaporeIndustrial Parks, and the Batam, Bintan and Karimun (BBK) industrial parks in Indonesia.

ouIndustrial Park

The SuzhouIndustrial Park, or SIP, was our first industrial project with China and we celebrated its 15th anniversary last year. The park spans 288 square kilometres (28,800 hectares), of which 80 square kilometres (8,000 hectares) belong to the China-Singapore collaborative area. Aside from the high-tech industrial park, the SIP also houses a modern township and about 9 universities and research institutes.SIP's GDP reached US$16.4 billion as of end-2009, and attracted US$1.8 billion in utilised FDI last year.SIP’s fiscal revenue also grew by 13% year-on-year to reach US$1.6 billion last year. At the end of last year, a total of 584 companies operate in the SIP China-Singapore collaborative area. Despite some early difficulties, SIP is now one of China’s top performing industrial parks.

Vietnam-SingaporeIndustrial Park

Singapore and Vietnam jointly built our first Vietnam-SingaporeIndustrial Park, or the VSIP, in 1996 in Binh Duong province in the South. Following its success, a second industrial park was added on, and subsequently a third township was built in Bac Ninh in the North.The VSIPs have attracted investments in excess of US$2.5 billion, and now house 380 companies from more than 20 countries, employing over 60,000 workers.In January this year, the fourth VSIP in Hai Phong province was officially launched. Together, the VSIPs cover an area of about 48 square kilometres (4,845 hectares).Much closer to home, Singapore has also pioneered industrial estates in the neighbouring Riau islands of Batam, Bintan and Karimun.

What is so distinctive about Singapore’s industrial parks? It is that we have pursued an integrated approach which brings together industrial, residential and commercial zones within our industrial parks. We call this the ‘work, live, play’ concept. The underlying belief is that the industrial park should be self-sustaining, supported by a skilled and satisfied workforce, and served by amenities such as schools, restaurants, entertainment centres and green spaces. With the increasing concern over climate change and carbon emissions, Singapore has tried to also create environmentally sustainable industrial spaces. The EcoCity project in Tianjin, China, is an example of one such endeavour

It has not always been a smooth ride but Singapore companies have gained much from our experience in planning, developing and operating SEZs in the region over the past two decades. Distilling our experiences, we have found that there are several critical factors for success. First, location and infrastructure are key factors. Not only must the SEZ be well-linked by roads, airports or seaports for access to domestic and global markets but also to infrastructure such as power and water supply. Second, the presence of clear policy guidelines and a streamlined tax and incentives structure will definitely go a long way to creating an attractive investment environment. Third, good management at the administrative level to drive the development and ensure the smooth running of the SEZ operations. And last but not least, gaining the support of central and local levels of government is also imperative for the success of the SEZs.

Participating in India’s SEZ Sector

In India, the concept of the SEZ is not new, with one of the earliest Export Processing Zones in Kandla, Gujarat set up in 1965. With economic growth in India booming at an expected 8.5% this year and your exports taking up an increasing larger share of global trade, it is not surprising that the SEZ model has emerged for industrial development and export promotion.

India is, of course, a different market from where we have operated. Unlike China and Vietnam, India has a much larger number of formally approved SEZs

[1]

, more than 500 with various forms of public and private equity configurations. Issues pertaining to land acquisition, resettlement and creation of employment are important concerns which need to be addressed and managed well.

Nevertheless, Singapore companies have had some success in India, most notably Ascendas, which set up the Bangalore IT Park in 1993. Ascendas has since replicated the model across India and will be sharing its experiences at the Seminar later.So how can Singapore companies contribute to India’s SEZ sector?From our experience and track record in China, Vietnam and other markets, our companies have developed expertise in many areas.Let me just highlight two.

Master Planning and Industrial Development

First, master planning and industrial development. Aside from Ascendas, Jurong India also has a substantial presence across 18 cities in India, with over 80 million square feet of land under various stages of design and implementation.They bring premium designs and technology to the setting up of integrated townships, SEZs, industrial parks, nuclear cities, and urban infrastructure.

Transport and Logistics

Second, transport and logistics. As I mentioned earlier, an efficient transport and logistics chain is critical to the success of a manufacturing hub or SEZ. Singapore’s third-party logistics companies are well-equipped to meet these needs.For example, Changi Airport International, together with Bengal Aerotropolis Projects, pioneered India’s first Greenfield ‘Aerotropolis’ project in Durgapur, West Bengal.When completed, the Aerotropolis will not only house an airport but also an industrial park, logistics hub, IT park and supporting infrastructure like housing, tourism and healthcare facilities.

Singapore companies, therefore, have much to offer and this Seminar is a welcome opportunity for us to learn more about India’s SEZ policies and explore areas for further cooperation.

Conclusion

In closing, I congratulate the Indian High Commission in Singapore for their initiative in organising this Seminar and I wish all of you a very fruitful session ahead.

Thank you.

[1] According to India’s SEZ website, as of Feb 210 there are 574 formally approved SEZs