INVESTMENTS PLAN IN CHINA

INVESTMENTS PLAN IN CHINA

1.

Mdm Ho Geok Choo asked the Minister for Trade and Industry in view of China's red-hot property market (a) how have Singapore's investments in China held up; (b) what is our long-term investment plan; (c) what advice can the Ministry give to Singapore businesses who plan to enter China's property market; and (d) whether there has been any cases of Singapore businesses affected by the sudden upswing.

Mr Lim Hng Kiang: China is the top investment destination for Singapore companies which have invested a cumulative US$40 billion as at end-2009. Singapore companies continue to see investment opportunities in China to ride on its buoyant economy and attractive long-term prospects. Their investments in China are well-diversified across many sectors, from manufacturing and retail to logistics, infrastructure development and real estate. As China looks to develop its inland regions, Singapore companies are also exploring opportunities in less developed areas such as in Western and Central China.

Companies investing in China, or in any other regions, should take a long-term view of their investments; study the Chinese economy and markets to understand the medium to long-term trends. We expect companies to carry out due diligence and feasibility studies as well as conduct their own company risk assessment and management. Similar to investing in other markets, companies should expect cyclical upswings and downturns when they invest in China. Companies which make informed, risk-adjusted investment decisions would find that they are better able to cope with shifting trends such as the current upswing in the Chinese property market.

The current upswing in property prices is mainly concentrated in the residential property segment. Although there has been some spillover to the commercial and industrial property segments, office and industrial rentals appear not to have risen excessively.

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