THE STEP TOWARDS INTERNATIONALIZATION FOR SINGAPORE CONSTRUCTION INDUSTRY : THE POTENTIAL ASEAN MARKET

Abstract

The aim of this dissertation is threefold : to demonstrate the necessity for Singaporean contractors to explore foreign markets, examine ASEAN as a potential construction market for local contractors and propose possible strategies for penetration into this market. The booming days of the early eighties have left the Singapore construction industry with a legacy of excess capacity in current times. This dissertation briefly examines the present situation and projected future scenario facing the local industry and illustrates the need to export. It also describes the increasing scale and importance of exporting construction services to foreign markets. A review of the Eclectic Theory of International Production, coupled with the regional developments, indicates that the ASEAN construction market is a logical extension to the local market. A closer look at the individual ASEAN countries in terms of their economies, indigenous construction industries, current trends and planned public expenditures as indicators of future market sizes .. reveals a favourable picture, with the exception of Brunei, of the potential of the ASEAN construction market. The barriers to entry into these individual markets are also described. The discussion then centres around the strategies employed by the Japanese contractors in penetrating the regional market and the factors for their success, with the intention of deriving some useful suggestions for Singaporean contractors to consider. Though it is not possible to follow the Japanese model exactly, due to structural differences between the two industries, it does highlight the necessity for the Singapore construction industry to upgrade itself before its attempts to export can be successful. As a result of this analysis, two penetration strategies are proposed : close collaboration with the government and parties of different industries and specialization into construction processes. To fully exploit, maintain and develop comparative and competitive advantages, the Singapore construction industry must develop a global network of subsidaries or branches within a flexible organisational structure in the long run.