Singapore drops control of Suzhou park

The joint venture, a pet project of Singapore Senior Minister Lee Kuan Yew, had been intended as a symbol of Sino-Singapore economic relations and a litmus test for future investment.

However, after five years' hard slog, it has ended up a prime example of how such projects can go wrong.

Months of fruitless complaints and hollow promises ended yesterday with Singapore signing a new agreement with the mainland to scale back significantly its involvement in the 70 square kilometre park after completing just the first eight sq km.

On January 1, 2001, Singapore will cut its stake in Suzhou Industrial Park from 65 per cent to 35 per cent, at the same time yielding day-to-day management control. At the outset in 1994, Beijing promised that the mega-project would enjoy special priority status and help as a reward for Singapore transferring technology and management know-how.

Instead, Singapore's supposed joint-venture partner, the Suzhou municipal government, has opened a rival bargain-basement industrial park virtually next door, which has stolen potential tenants away.

The deal to scale back Singapore's involvement was struck in Singapore after talks between delegations headed by Singapore permanent trade and industry secretary Khaw Boon Wan and Suzhou party secretary Liang Bahua.

Mr Khaw said: "Like all big projects, we have encountered problems in implementation.

"Out of these serious consultations, we have pragmatically acknowledged the operating constraints and successfully formulated a good package of solutions on the best way to advance the project under the circumstances."

Under the new deal:

• Singapore will help complete developing and marketing the first eight sq km, to serve as a role model for the remaining land;
• Suzhou municipal government will make an announcement to reaffirm the park's priority status and to refer all suitable tenants to it;
• the Suzhou mayor will chair regular meetings to avoid disorderly competition between the park and its rival, the Suzhou New District;
• residents of Suzhou old city will be encouraged to move to the park to provide an initial 20,000-strong population. Singapore developer Wing Tai will form a venture to build homes;
• Singapore will train a team of mainland managers to take over management of the park on January 1, 2001;
• the two sides will raise $100 million in loans to cover further finance costs.

So far, the Sino-Singapore park has attracted 133 projects and investments totalling $3.7 billion.

After initially keeping tight-lipped, Singapore has been unusually vocal in its criticism of the mainland's mishandling of the slow progress of the project in recent weeks.

Philip Yeo, chairman of Singapore's Economic Development Board, said yesterday: "The key thing here is logistics [and] culture. They do things differently."

Senior Minister Lee waited until December 1997 before publicly airing his frustrations with Chinese President Jiang Zemin, who quickly promised the park would get priority over others, but competition from Suzhou New District persisted.

Earlier this month, Mr Lee said: "We are not happy because we are not getting the kind of attention we were assured we would get - special attention. Indeed, what we are getting now is competition."