The extent of Singapore’s investments abroad

228 Pages·2018·12.79 MB·English

by  Okposin

THE EXTENT OF SINGAPORE’S INVESTMENTS ABROAD
“To God Be The Glory”
The Extent of Singapore’s
Investments Abroad
SAMUEL BASSEY OKPOSIN
Co-ordinator, MBA Centre
Universiti Telekom (Universiti Multimedia)
Malaysia
First published 1999 by Ashgate Publishing
Reissued 2018 by Routledge
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Copyright © Samuel Bassey Okposin 1999
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are used only for identification and explanation without intent to infringe.
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The publisher has gone to great lengths to ensure the quality of this reprint but
points out that some imperfections in the original copies may be apparent.
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A Library of Congress record exists under LC control number: 98074637
ISBN 13: 978-1-138-34901-8 (hbk)
ISBN 13: 978-1-138-34904-9 (pbk)
ISBN 13: 978-0-429-43644-4 (ebk)
Contents
List of Tables vi
Foreword ix
Preface xii
Acknowledgements xiv
List of Abbreviations xv
List of Appendices xvii
The Author xix
1 Introduction 1
2 Determinants of FDI: Review of Theories
and Issues 16
3 Singapore’s Economic Policy and FDI Inflow 47
4 Extent of Singapore’s Overseas Investments 91
5 Empirical Findings: Testing for FDI Motivations 119
6 Conclusion 143
Bibliography 159
Appendices 183
Index 206
v
List of Tables
Table 3.1 Singapore: Major Indicators of Economic Growth
and Structural Change, 1960-96 50
Table 3.2 Comparative Growth and Inflation Rates for ASEAN
Countries, 1965-96 51
Table 3.3 Singapore: Growth Rates of GDP, Population and
Unemployment, 1960-96 56
Table 3.4 Singapore: Trade Unions Membership and
Industrial Stoppages, 1960-96 57
Table 3.5 Comparative Wage Rates in Selected Asian
Countries, 1964-68 60
Table 3.6 Singapore: Distribution of Employment and Value
Added in Manufacturing Industries, 1960-80 65
Table 3.7 Singapore: Percentage Growth Rate of Total
Work Force, 1970-2000 66
Table 3.8 Singapore: NWC Wage Increase Guidelines, 1986-96 68
Table 3.9 Singapore: Nominal, Real Earnings and Productivity
Growth Rates for All Industries and Manufacturing
Sector, 1981-96 69
Table 3.10 Productivity Performance among the East Asian NIEs,
1975-84 71
1 Table 3.11 Hourly Wages of Production Workers in US Dollars,
1980-84 71
" Table 3.12 Singapore: Indices of Unit Labour Cost and
Unit Business Cost (1983=100) 72
Table 3.13 Singapore: Percentage Change in the GDP of Major
Economic Sectors (Annual Data), 1980-90 74
Table 3.14 Singapore: Seasonally Adjusted Percentage Change in
Major Economic Sectors (Quarterly Data, 1985 Market
Prices), 1983-86 74
VI
Table 3.15 Singapore: List of Tax Incentives 78
Table 3.16 Singapore: Foreign Investment Commitments in the
Manufacturing Sector (in Gross Fixed Assets), 1960-96 80
Table 3.17 Singapore: Investment Commitments in Manufacturing
by Country of Origin, 1980-96 81
Table 3.18 Singapore: Distribution of Major Manufacturing
Activities by Investors, 197 5-85 84
Table3.19 Singapore: Net Investment Commitments in
Manufacturing, 1973-95 86
Table 4.la Singapore: Nature of Direct Investment by Activity of
Investors in Singapore and Activity Abroad, 1990 (in
Percentage) 98
Table 4.lb Singapore: Narnre of Direct Investment by Activity of
Investors in Singapore and Activity Abroad, 1995 (in
Percentage) 98
Table 4.2a Singapore: Nature of Established Firms Abroad by
Activity of Investors and Activity Abroad, 1990 (in
Percentage) 99
Table 4.2b Singapore: Nature of Established Firms Abroad by
Activity of Investors and Activity Abroad, 1995 (in
Percentage) 99
Table 4.3a Singapore: Diversification in Terms of Types of
Companies Set Up Abroad, 1990 100
Table 4.3b Singapore: Diversification in Terms of the Amount of
Direct Investment Abroad, 1995 101
Table 4.4 Singapore: Extent of Overseas Investments, 1976-90 102
Table 4.5 Singapore: Inward and Outward Direct Investment,
1981-93 104
Table 4.6 Inward and Outward Direct Investment Among the
East Asian NIEs, 1981-90 105
Table 4.7 Outward Direct Investment as a Percentage of GDP and
Export Among the East Asian NIEs, 1981-90 106
Table 4.8 Singapore: Distribution of Direct Investment by
Country and Activity, 1990 108
Table 4.9 Singapore: Distribution of Established Companies
Abroad in the Top Five Host Countries, 1990 109
Table 5.1 Singapore: Total Respondents by Manufacturing
Industries 122
Vil
Table 5.2 Singapore: Size of Firms Surveyed 123
Table 5.3 Singapore: Size of Respondents Overseas Engagements
by Industry 123
Table 5.4 Singapore: International Direct Investment Strategy 124
Table 5.5 Distribution of Push Factors for FDI by Group of
Investors 125
Table 5.6 Distribution of Pull Factors for FDI by Group of
Investors 125
Table 5.7 An OLS Regression of FDI and Profitability from
Abroad (Annual Data) 1981-90 127
Table 5.8 Student t-test of Investment, Push and Pull Factors by
Ownership 129
Table5.9 Stepwise Multiple Regression for Foreign and
Local Firms 131
Table 5.10 Stepwise Multiple Regression for Foreign Firms 132
Table 5.11 Stepwise Multiple Regression for Local Firms 132
Table 5.12 Firm Size (Foreign and Local) Cross-tabulation of
Expected and Actual Values of the Proportion of Firms
in each Category 134
Table 5.13 Strategy (Foreign and Local) 134
Table 5.14 Spearman’s Rank Correlation Coefficient for Push
Factors by Foreign and Local Firms 137
Table 5.15 Spearman’s Rank Correlation Coefficient for Pull
Factors by Foreign and Local Firms 13 8
Table 6. la Singapore: Key Indicators of Economics Balance,
1994-2000 145
Table 6.1b Singapore: Forecasts by Sectors and Demand Aggregates,
1994-2000 145
Table 6.2 Singapore: Long Term Indicators, 1989-2000 146
viii
Foreword
The 1997-98 Pacific Asian crises have served to refocus attention on the
regional patterns of rapid export-oriented manufacturing based growth. In
particular, the differential impact of the crises has underlined the differences
between the Pacific Asian economies. This is important because much of the
vast literature that the region’s ‘miracle growth’ has given rise to has tended
to stress the similarities in terms of policies and patterns of growth. This is
most clearly the case in such studies as the World Bank’s (1993) The East
Asian Miracle. In many ways Singapore with its almost completely open
trade and financial regimes is much closer to the open economy model of the
Pacific Asian economies presented by such agencies as the World Bank.
However, the international agencies also, until the 1997-8 crises, underplayed
the developmental role of the state in Pacific Asia, yet in Singapore the state
has perhaps played the most all pervading role in development anywhere in
the region outside of the socialist bloc.
For all the Pacific Asian economies, foreign investment and
transnational activity have played significant, but far from uniform roles in
development. Again Singapore is at the extreme with by far the most
internationalised economy in the region and the greatest dependence on
foreign investment and enterprise. However, particularly since the early 1980s,
Singapore, like the other Newly Industrialised Economies (NIEs), has
become a substantial exporter of capital to other parts of Pacific Asia. This
has been very largely a consequence of the upgrading of their production
facilities and the decanting of labour intensive and low-tech manufacturing
activities in the face of rising costs and government policy aimed at moving
to higher levels of value-added production.
The export of capital and manufacturing processes has been a major
factor in the rapid development of export oriented manufacturing in
Indonesia, Malaysia, and Thailand during the late 1980s and in the Peoples’
Republic of China (PRC) and Vietnam during the 1990s. These developments
IX