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1、SINGAPORE AND THAILANDAndrea Goldstein (OECD Economics Department, Paris)&Pavida Pananond (Thammasat University, Bangkok)A contribution to the ICRIER Intra-Asian FDI Flows project directed by Rajiv Kumar and Ramkishen S. Rajan. The content of this paper does not in any way represent the views of the
2、 OECD, the OECD Development Centre, their members, or Thammasat University.AbstractThis paper sets out to examine the context of the foreign expansion of multinational enterprises from Singapore and Thailand. For each of them, the main trends are presented, the strategies and motives of the main pla
3、yers are discussed, and the consequences are analyzed. We stress that the rise of Singaporean and Thai multinationals cannot be properly understood unless the social, economic, and political institutions in which they are embedded are also discussed.Table of content1.Introduction32.Hamlet without th
4、e Prince? The Importance of Embeddedness in the Analysis of Asian Corporate Strategies43.Singapore Inc. Abroad6History6Actors9Drivers13Consequences144.Thai Firms Abroad19History19Actors23Drivers27Consequences285.Implications, for Research and Policy29References311.IntroductionIn the analysis of outw
5、ard foreign direct investment (OFDI) in developing Asia, the case of Singapore is interesting from many angles. First, as it pertains to a very successful and small city-state economy, Singapore holds the emerging economies record for per capita OFDI stock and flows. Second, some Singaporean multina
6、tional enterprises (MNEs) are in the process of becoming major players in the global economy, while others have expanded their footprints regionally, mostly though not exclusively through mergers and acquisitions. Third, to the extent that the prominent role of the state, including so-called governm
7、ent-linked companies (GLCs), is a distinguishing factor of the Singaporean economic miracle, it is important to understand how adaptable this model is to globalization and OFDI. Fourth, some such deals have stirred considerable controversy, making it crucial to understand whether the same “economic
8、nationalism” pressures that are seemingly gaining momentum in the OECD area (Goldstein 2006), are also mounting in Asia. We pair Singapore and Thailand in our analysis for three additional reasons. First, in 2004 Thailand was the fastest-growing ASEAN destination for Singapores OFDI. Second, Temasek
9、s 2006 acquisition of Thailands Shin Corp, the holding company owned by then Prime Minister, Thaksin Shinawatra, has proved to be the most controversial among Singaporean GLCs investment in foreign countries. There are additional links between the two economies. For instance, Thai Beverage went publ
10、ic in Singapore in May 2006 after protests against alcohol derailed a Bangkok listing. Chumpol NaLamlieng, who was President of Siam Cement for 12 years and remains as Chairman of the Management Advisory Committee, is a non-executive and independent Director of SingTel. He was previously Director of
11、 SembCorp Industries. Third, Shin itself is one of Thailands fastest-growing MNEs, with characteristics that are common to other Sino-Thai business groups such as CP Group and Siam Cement. Singaporean MNEs, including GLCs, have also targeted China (Yeung 2004). In particular, all such entities have
12、leveraged their ethnic connections and guanxi to enter the Chinese market at an early stage and steal a march on more powerful Western competitors. We start by summarising the main characteristics of Singapore OFDI and MNEs, i.e. motives, industrial and geographical distribution, competitive advanta
13、ges. In a companion paper we discuss in the greater depth how the internationalization of Singaporean state-owned enterprises fits into the literature on the international expansion of firms from developing economies (Pananond and Goldstein 2007). We point out that the existing literature has highli
14、ghted the limits of the regionalisation strategy, although it has not addressed the increasing resistance to Singaporean MNEs even if Temaseks ventures in some countries have met with resistance. In fact, to our knowledge Roberts and Dick (2005) is the only paper that analyzes GLCs internationalizat
15、ion. Then we explore the Thailand case to highlight some similarities, despite the much different scale of the two countries OFDI and the fact that in Thailand international expansion was led by the private sector. In the concluding section, we point out the potentials and pitfalls of the internatio
16、nal expansion of Singaporean GLCs and Sino-Thai business groups and draw some implications on how these traits might have to change as they go global. 2.Hamlet without the Prince? The Importance of Embeddedness in the Analysis of Asian Corporate StrategiesStudies of third-world multinationals, somet
17、imes referred to as multinationals from developing countries, Yeung (1994: 302-3) strongly criticised the term third-world multinationals as imperialistic and not a theoretically fruitful way to conceptualise the nature of international business and production. Instead, the author suggested that a m
18、ore unbiased term developing country multinationals be used instead. have emerged as a separate stream of literature since the 1980s. Two different groups can be identified in the literature. While they are distinct in terms of timing and view on the nature of these multinationals competitive advant
19、age, both share a strong emphasis in considering that their competitive advantage lie in the ability to gradually accumulate technological skills from imported technology. The first group argued that developing-country multinationals adapt the imported technology to the environment of developing cou
20、ntries through downscaling techniques such as reducing operation scale, substituting machinery with human labour, and replacing imported inputs with cheaper local ones (see Wells 1977, 1981, 1983; Lecraw 1977, 1981; Kumar 1982; and Lall (1983a, 1983b). The second group believed that the competitive
21、advantage of firms from developing countries derived from these firms ability to improve their technological capabilities through the learning-by-doing process (see Vernon-Wortzel and Wortzel 1988; Cantwell and Tolentino 1990; Tolentino 1993; Lecraw 1993, Ulgado et al 1994; Dunning et al 1997; van H
22、oesel 1997). In sum, the literature on multinationals from developing countries has highlighted the technological capabilities accumulated through the process of learning as the key source of competitive advantages for developing-country multinationals. Notwithstanding its valuable insights, this st
23、ream of literature is not without limitations. In fact, while the majority of scholars contend that the emerging MNEs can be nested within standard MNE theories (see UNCTAD 2006), we think that these multinationals have unique and distinctive characteristics that need to be pinpointed and explained.
24、 Moreover, research on Asian business demands a departure from theory that was developed in a US context, which tends to define rigor in terms of the use of quantitative methods, and limits the sorts of exploratory research that still may be most productive in helping us understand Asian business an
25、d management (Lynn 2006). The need of international business scholars to address the diversity of social, economic, and political institutions that affect MNEs behaviours has also recently been emphasised (see Rodriguez et al. 2006, p. 734). Pananond (2001a, 2001b, 2002) contended that the existing
26、literature offered a rather limited and deterministic interpretation of what constituted the competitive advantages of developing-country MNEs and of their development. The conventional approach of comparing multinationals from developing countries to their counterparts from developed economies led
27、to deterministic implications that the former could catch up with the latter only through improving their technological skills. With such a strong hypothesis in mind, other explanations of alternative routes to the development of multinationals from developing countries were overlooked. The under-so
28、cialised nature of the existing literature leads to a narrow interpretation of what constituted a firms competitive advantages. Insofar as they interpret firms behaviour as rational actions of atomised actors acting independent of social, historical or political pressure, standard theories failed to
29、 address how social relations and networks, as well as sui generis organizational structures such as state-ownership, could contribute to the competitive advantages of multinationals from many Asian developing countries (Pananond 2001a, 2001b, 2002 and Yeung 1994, 1998). The internationalisation pro
30、cess of four Thai MNCs, namely the Charoen Pokphand (CP) group, the Siam Cement group, the Dusit Thani group and the Jasmine group, was guided not only by their accumulated technological skills, but also by their networking capabilities, or the ability to draw from complementary resources of differe
31、nt partners and to turn them to the firms benefits (Pananond 2001a). While industry-specific technological skills were fundamental in creating their competitive advantages, networking capabilities served as an additional source of advantage that could be exploited across industries during these firm
32、s growth and expansion.The international expansion of state-owned companies is another example of a similar dynamic of corporate competitiveness that is determined by close and preferential access to non-market resources. Insofar as these companies extend the political power of the state, their inte
33、rnationalization may be perceived by authorities and society in the host countries as a threat to their sovereignty. This may in turn generate a higher level of political risk than that faced by their privately owned counterparts. While some of these political challenges may be disregarded and consi
34、dered simply as economic nationalism of the host countries, the international impacts of state entrepreneurship should be further debated. The case of Temaseks investment in Thailand is illustrative of the economic and political consequences that SOEs may face in their global quest. 3.Singapore Inc.
35、 AbroadSingapore has used inward FDI as a key policy instrument to upgrade its international position. Insofar as this strategy has transformed the countrys factor endowment, the governments stance towards OFDI has changed correspondingly (Blomqvist 2002). Indeed, for more than three decades now, Si
36、ngapore has also recorded significant outward foreign direct investment (OFDI) flows. Singapore is the fourth largest outward investor from developing countries (UNCTAD 2006), with S$ 174 billion as OFDI stock at the end of 2004 (Singapore Department of Statistics 2006). HistorySingapores OFDI has g
37、one though three stages of progressive engagement. Initially, some timid attempts were made to delocalise production of labour-intensive goods such as clothing to lower-wage countries that benefited from quota-free entry into major Western markets under the Multi-Fibre Agreement (MFA). OFDI was unde
38、rtaken initially to counter labour scarcity and trade restrictions, in particular MFA quotas. This type of investment used host economies with less stringent quotas (Malaysia and Thailand initially, Mauritius later on) as an intermediate production point to third countries or the global market. In M
39、auritius, in particular, Singapore was the second largest investor in 1990-98 (UNCTAD 2001, p. 14).In a second phase, authorities identified overseas investment and the development of offshore opportunities as a long-term solution to the nations small scale and sluggish growth in demand and investme
40、nt opportunities and drew a regionalisation strategy comprising several programmes (Pereira 2005). In 1980s, Singapore shifted away from traditional light industries into relatively more complex manufacturing activities, in particular electronic goods assembly. In this second phase, OFDI aimed to re
41、duce vulnerability and build a presence in other regional countries that could complement the small size of the domestic economy. The so-called industrial township projects characterised this phase of Singapore regionalisation. Temasek, which derives from the Javanese ”tan-ma-hsi”, meaning ”sea town
42、”, wields a huge sway over the Singaporean economy. Established in 1974, this state-owned holding entity has stakes in 70 companies, including Singapore Telecommunications (SingTel), the DBS banking group, port operator PSA, Singapore International Airlines (SIA), shipping line Neptune Orient, logis
43、tics group SembLog, and Singapore Technologies (ST). This in turn is another diversified holding with interests in semiconductors, defence, property development, and hotels. With 2005 revenues of US$44 billion and net profit of US$5 billion on an asset base of US$126 billion, Temasek accounts for a
44、quarter of stock market capitalization. As of October 2004, the slightly larger universe of GLCs accounted for nearly 40% of total capitalization of the Singapore Exchange (SGX), while as of November 2005 the top six Singapore-listed GLCs accounted for nearly a quarter of total SGX capitalization (U
45、S Embassy, various years). The Government asserts that GLCs (defined here as those companies in which the Government has a 20% or greater ownership and/or controls the majority of voting rights) account for just 13% of GDP. The use of a broader definition of GLCs, including a lower percentage of Gov
46、ernment ownership as well as GLC subsidiaries, would boost that percentage considerably. Although ethnic Chinese multinationals and SMEs also contribute to Singapore OFDI (Tsui-Auch 2006), a significant, albeit decreasing, part of Singapore OFDI originates from Singapore affiliates of foreign-contro
47、lled MNCs (UNCTAD 2005). The contribution of OFDI by foreign MNCs affiliates decreased from 46% in 1996 to 39% in 2002 (UNCTAD 2005).A third phase has started after the 1997 Asian crisis when Singaporean MNEs began to use mergers and acquisitions in Asia and beyond to enhance their competitiveness.
48、Most of these deals were made by GLCs in banking and other services (see below).In terms of geography, four fifths of total OFDI has been in developing countries, with South, East, and Southeast Asia accounting for 48.9% of OFDI stock (Table 1) (Singapore Department of Statistics 2006). In fact, the
49、 British Virgin Islands is the main destination in 2004 (7.3% of total stock), followed closely by China (6.4%). Within Asia, three ASEAN countries (Malaysia, Indonesia, and Thailand) accounted for the largest part of investment flows in Asia (together approximately S$38m in 2004), while China came second at nearly S$21m5m. However, in terms of growth, the region with the fastest growth is
