City Life: Singapore

The island state that wishes it could be towed to less murky waters

Eric Ellis

14 April 2007

The junta in Burma has helpfully offered to step into Jakarta’s shoes and supply Singapore’s sand. But with such fractious and — the truth that dare not speaks its name in Singaporean diplomacy — mostly Muslim neighbours like Malaysia and Indonesia, sometimes Singapore’s leaders seem to want nothing more than to attach tugboats to their mostly Chinese-inhabited dot and tow it northwards, anchoring somewhere off the coast of China equidistant from Japan, Taiwan and South Korea, where Asia’s economic action really is.

Take tetchy Thailand. Last year Singapore Inc, in the form of the government-owned investment agency Temasek, bought the then Thai Prime Minister Thaksin Shinawatra — Asia’s Silvio Berlusconi — out of his family’s telecom-to-TV conglomerate Shin Corp. The US$4 billion deal, the biggest in Thai history, was also the biggest done while Madame Ho Ching has run Temasek. She happens to be the wife of Singapore’s Prime Minister Lee Hsien Loong, himself the eldest son of Singapore’s philosopher-king Lee Kuan Yew.

Temasek’s transaction was anything but transparent. Thaksin and his family didn’t pay their due taxes, and there were mysterious nominee companies entangled in the deal. Outraged Thais hit the streets in protest — perhaps looking for an excuse to do so. Temasek’s dealmaking suddenly plunged its neighbour into turmoil and by September, Thaskin was toppled in a bloodless military coup blessed by King Bhumiphol.

Shin has been a spectacular misjudgment for Madame Ho and Temasek, an US$80 billion enterprise that frequently compliments itself on its investment perspicacity. A year later, Shin is worth about half what Temasek paid and Singaporeans, the ultimate owners of Temasek, are outraged. Last month things got worse when the Thai junta seized a Shin-owned TV station in lieu of an unpaid $3 billion fine. The rest of the business is vulnerable to seizure too as Thailand is gripped by a wave of economic nationalism.

What with Singapore’s sandfight with Indonesia, Temasek’s blow-up in Bangkok, and perpetually awkward cross-causeway relations with Malaysia, perhaps Singapore can also ask Rangoon’s generals to supply the towropes — and the cheap labour as well — for that longed-for long haul north.

Eric Ellis is Southeast Asia correspondent of Fortune magazine.