MANUFACTURING 2000

Abstract

"All successful mature economies have this external dimension which broadens their domestic operations and helps to upgrade their economy." Senior Minister, Lee Kuan Yew (The Straits Times, 8th January 1993)

This landmark speech by the Senior Minister al the 1992 Businessman of the Year Award enunciated the new focus in Singapore's economic development by urging the private sector to venture overseas. Since then, "regionalisation" has become a buzzword among local businesses. This initiative will have profound repercussions on the economic development of Singapore, especially the manufacturing sector. Manufacturing is one of the twin growth engines in Singapore today. This sector has registered a growth rate of 4.3% in 1997, creating employment and economic spin-offs to the domestic economy. As Singapore pursues her economic goals of becoming a developed nation, manufacturing continues to play a vital role in her economic development. The cluster development of the manufacturing sector is mapped out in a strategic Manufacturing 2000 plan (M2000) formulated by the Economic Development Board (EDB). This plan is part of Singapore's regionalisation thrust to grow a robust 'external wing' to complement its domestic economy, as well as to sustain the GDP share of the manufacturing sector at more than 25% in the Next Lap. M2000, which encompasses the transborder cluster development approach, promotes the development of industrial parks in key emerging markets such as Indonesia, China and Indochina. This not only capitalises on Singapore's expertise in infrastructure development but also helps to develop linkages back to Singapore. M2000 enables Singapore to overcome her land and labour constraints by accessing the abundant resources and domestic markets of these countries.

Thus, the cluster development of M2000 takes on a cross border dimension as it supports Singapore's regionalisation thrust and releases resources within Singapore for higher value-added projects while upgrading the manufacturing capabilities of selected sites. The focus of this thesis zooms into one such site: Batamindo Industrial Park (BIP), the first of Singapore's overseas industrial township.1

BIP is a fruition of an economic collahoration between the Singapore and Indonesian governments to foster the development of a self-sufficient premier industrial park on Batam Island. Besides heing a low cost production site, BIP incorporates the complementary resources or both economies to create a competitive environment for its tenants. This academic exercise attempts to shed light on the competitive environment of BIP, by analysing the success formula of BIP through the use of Michael Porter's theory of competitive advantage. It will also illustrate how the value-added chains of firms can be enhanced across nation borders. Being the first comprehensive empirical study on BIP, this academic exercise offers illuminating insights into the 'micro' aspects or investment decisions of the BIP tenants and the problems they faced in their operations. In addition, the implications drawn from these results will provide some practical guidelines for the policy decisions of governmental agencies and managers alike.

1 Examples of other Singapore flagship projects include the Bintan Industrial Estate, Bintan Beach International Resort, Karimun Marine and Petroleum Complex, Bangalore Information Technology Park China-Singapore Suzhou Industrial Park, Wuxi-Singapore Industrial Park and Vietnam-Singapore Industrial Park.