TRANSBORDER DEVELOPMENT IN THE FRAMEWORK OF M2000 : THE BATAMINDO EXPERIENCE

Abstract

Manufacturing provided the initial impetus for Singapore's economic growth since independence in 1965. Today, the sector still remains as an important contributor to Singapore's GDP growth, providing employment and substantial spin-offs to the rest of the economy. To sustain its growth at more than 25% of GDP, the Economic Development Board (EDB) has mapped out a strategic plan, Manufacturing 2000 (M2000). This plan encompasses a transborder cluster development approach, and attempts to overcome Singapore's land and labor constraints by leveraging on regional resources. A major strategy in this approach is to establish "Singapore style" regional industrial parks in the region. To date, eight flagship projects have been developed: the China-Singapore Suzhou Industrial Park and the Wuxi-Singapore Industrial Park in China; the Batamindo Industrial Park, Bintan Industrial Estate, Bintan Beach International Reso1i and the Karimun Marine and Petroleum Complex in Indonesia; the Bangalore Information Technology Park in India; and the Vietnam-Singapore Industrial Park in Vietnam. The focus of this study is on Batamindo Industrial Park (BIP), the most successful flagship project.

What is so special and unique about BIP such that it attracts world-renowned MNCs? This academic exercise seeks to highlight the success formula of BIP that goes beyond the simple theory of comparative advantage. BIP is not just a cheap production site; it is the fruition of economic collaboration between Singapore and Batam. It is a place where the two economies pool their resources together such that a competitive environment is created for the BIP tenants. The more important issue is how the tenants execute their international strategies in this environment such that their value chains are enhanced across national boundaries. The methodology used in this study is a framework devised from the Porter's theories of competitive advantages. It is holistic in nature as it analyses at two levels: macro (BIP) and micro (its tenants). Synergistic effects occur when there is a match between the competitive environment in BIP and the competitive strategies of its tenants. This is basis of BIP's success.