SUZHOU TOWNSHIP PROJECT (Investments committed by Singapore Labour Foundation)

Mr Chia Shi Teck asked the Minister for Labour (a) if he will give more details of the Suzhou township project led by the Singapore Labour Foundation; (b) how much money has SLF committed to all its investments in China for the years 1994 to 1998; (c) where does the money come from; and (d) how will the investments benefit the labour movement in Singapore.

The Deputy Prime Minister (Mr Ong Teng Cheong): Mr Speaker, Sir, since I have been personally involved in this project from the very outset, I therefore undertake to answer the question raised by the hon. Member.

The Suzhou township project was widely reported in the press during my official visit to China some two weeks ago. It has generated some public interest, and I would like to take this opportunity to explain briefly the background and the role of the Singapore Labour Foundation in as far as this project is concerned.

In October last year, when I was accompanying the Senior Minister on his visit to China, a Xinhua news agency reporter suggested that Singapore could help build a Singapore-style township in China. I thought it was an interesting idea, and I asked him where the location for this township should be. He said he did not know.

Then, when we travelled from Wuxi to Shanghai, we stopped over at Suzhou. I noticed that Suzhou was strategically located at the heart of the Yangtze River Delta. It was close to Shanghai, about 90 km away. Hongqiao International Airport was also not too far away. That was when the idea of the Suzhou township project was mooted.

In December last year, the Mayor of Suzhou visited me in Singapore. He was keen to tap the Singapore's experience and expertise. So we discussed the idea - he was excited - and he invited me to pick a site in Suzhou to build a Singapore-style industrial township.

Basically, the concept is for Singapore to help plan, develop and manage the township, adopting the Singapore software, but adapted to fit into the Chinese environment.

A Singapore consortium will be set up to participate in the development of the township. The project offers a unique opportunity for Singapore to export its expertise in township planning, development and management. If successful, it will create a familiar industrial and business environment for Singapore companies which are keen on venturing into China. This way, it will help encourage the development of an external economy for Singapore. It will not only open up a new niche for Singapore, but also a window into the huge China market for our local businesses.

For reasons of expediency, I have used the Singapore Labour Foundation as a vehicle to spearhead the project. The Foundation's role is therefore that of a facilitator, that is, to help open the door.

As you have read in the press, we have reached an in-principle agreement with the Suzhou Government to proceed with the township development project. The Foundation will now invite the private sector to form a consortium to carry on with the project.

Apart from the Suzhou project, the SLF is also exploring other economic ventures not only in China, but also in Malaysia and elsewhere.

But as all these discussions are still preliminary, I am not in a position, at this point of time, to say how much money the Foundation will commit to its investments in China over the next five years.

The Foundation has always exercised prudence in its investments. To fund its overseas ventures, it will use only funds derived from its investment income. The bulk of the Foundation's accumulated surplus comes from its domestic investments. These include investments in property and investment income derived from its subsidiary companies. Since 1990, the NTUC-related cooperatives also contribute part of their surpluses to the Foundation.

Like all other projects undertaken by SLF, such as the Pasir Ris Resort, the Sentosa Beach Resort and the Orchid Country Club, the ultimate objective of SLF's investments is to help raise the social and economic status of our workers, and ensure that our workers will continue to enjoy a fair share of Singapore's progress.

Mr Low Thia Khiang: Sir, what is the return that the Deputy Prime Minister expects from this project? As the Deputy Prime Minister has said that the main objective of SLF is to provide social amenities and improve the status of workers in Singapore, how would these investments in a foreign land cater to the needs of Singaporean workers and thus serve the new objectives of SLF?

Mr Ong Teng Cheong: Mr Speaker, Sir, I am not able, at this stage, to give a figure of the return on the investments. As I said, it is very preliminary at this stage and we do not even know the figures of investments in these projects in China and overseas.

On the question of how this will benefit workers, as Members know, this is not a zero sum game. The Minister for Trade and Industry had explained in his closing address at the Regionalisation Forum that regionalisation will be a major thrust in the next phase of our economic development to enable Singapore to overcome its resource limitations. When our businessmen invest overseas, it does not mean that they are shutting down their operations in Singapore and relocating their businesses wholesale to another country. Their overseas investments can complement their investments at home, and it will enable them to upgrade their Singapore operations, thereby creating higher value-added jobs and also better paid jobs for our workers. This is what the Japanese and the Swiss have done. The Japanese and the Swiss MNCs invest in almost every part of the world. By expanding their businesses overseas, they ensure that their mature economies continue to grow, and their standard of living remains among the highest in the world.

How do workers in Singapore benefit directly from these investments? As I have explained earlier, the ultimate objective of SLF investments is no different from its investments in Singapore, that is, to strengthen its financial resources so that it can do even more for workers in Singapore.

Mr Chia Shi Teck: Sir, the Hon. DPM mentioned about transferring software to Suzhou. From what we have read, the decision has not really been taken. But we have already signed the letter of intent to develop Suzhou township. So what will happen if the Government decides to go to Shandong, Yantai and Weihai?

Mr Ong Teng Cheong: Mr Speaker, Sir, as of now, the position is this. We have signed an in-principle agreement with the Suzhou Municipality to help plan, develop and manage a township. There are two parts to this development. So far, we have put up a rough outline plan for the development of the township. We will form a consortium to help develop this township, that is, we will be opening the door, making the preparation for the hardware transfer, and the investment will go to Suzhou. But as far as the software transfer is concerned, ie, to administer and manage this township, we have not yet made a decision, as reported in the press. I will be going to Shandong in about a month's time to look at the situation in Shandong. This was recommended by the Prime Minister, because I have not been to Yantai and Weihai. After the trip to Shandong, we will then decide whether the software transfer will take place at Shandong or Suzhou. But the hardware transfer to Suzhou will continue. This will be carried on by the private sector, ie, the consortium.

Mr Chng Hee Kok (Tampines GRC): Sir, will this consortium be a SLF-led consortium? For the private sector that has been invited, will it be Government-linked companies only?

Mr Ong Teng Cheong: The consortium would include members or companies from both the Government as well as the private sector. Whether SLF will hold a significant share it has yet to be decided. I believe SLF will hold a very small share or no share at all, because, as I have said, our role is that of a facilitator. It is not the objective of SLF to go into business. We will exercise prudence in our investment. Details would be released later, as we go along. So I would urge Members to be a bit more patient.