“I’m Not Proud of This Project”: Philip Yeo on Suzhou Industrial Park

This project will fail,” said Goh Keng Swee.

The China-Singapore Suzhou Industrial Park (SIP) project in the 1990s between the two countries was fraught with problems from the get-go. But few have spoken openly about them until now.

In the book, “Neither Civil Nor Servant”, former chairman of the Economic Development Board (EDB), Philip Yeo, shares why the project ran into so many issues that the majority ownership of the project was subsequently transferred from Singapore to China.

Mr Yeo, known for his shoot-from-the-hip bluntness which is matched only by that of the late former Prime Minister Lee Kuan Yew, opens up in the book by Peh Shing Huei, former China bureau chief at the Straits Times.

“I didn’t want to get involved,” Mr Yeo said in the book when asked about the SIP. “I never asked for this project and never wanted it. I did it for Lee Kuan Yew.”

“I’m not proud of this project,” said the man who has spent the better part of 40 years dedicated to his role as Singapore’s “salesman”, as he is sometimes referred to.

The SIP project was the first-ever state-to-state collaboration which China had been involved in at the time, and it came about after a chance exchange in a car in 1992 between Singapore’s then Deputy Prime Minister Ong Teng Cheong, and the Mayor of Suzhou, Zhang Xinsheng, while the former (and then Singapore Prime Minister Lee Kuan Yew) was on a visit to China.

DPM Ong had suggested that “both parties explore cooperation on the basis of transferring Singapore’s software expertise to Suzhou.”

In 1994, Singapore and China signed an agreement to build the SIP, an industrial township, with Singapore taking a 65% stake in the project, while China owned the other 35%.

The SIP would be a miniature Singapore, with a size of 100 square kilometres, located in the eastern coast of China.

The project, however, ran into trouble early on. In 1995, the Chinese were upset that the project had somewhat stalled. Lee Kuan Yew, on the recommendation of then EDB Managing Director, Lim Swee Say, approached Mr Yeo to take charge and move things along. His job was to bring in the investments to Suzhou.

“When I took over in 1996, I was up there in Suzhou every two, three months,” Mr Yeo says in the book. “I was on the road to bring in investments, to build the factories.”

Mr Yeo had “brought the full force of the EDB to bear” on making the project a success. Soon, many multi-national companies (MNCs) set up shop in the SIP.

However, the problems with the Chinese continued.

As then Senior Minister Lee Kuan Yew related in his autobiographical book, the Chinese were more interested in their own similar project, the Suzhou New District (SND), than giving their full support to the SIP.

The Chinese “[undercut] SIP in land and infrastructure costs”, SM Lee said. “This made SIP less attractive than SND.”

“I was very pissed off,” Mr Yeo said, and he made his feelings known to the Chinese.

“I bring you investments, I bring in know-how, I bring you jobs, I bring you exports, and here you are screwing me?” he said in the book.

When asked why the project turned out the way it did, Mr Yeo identified two “critical mistakes” which the SIP initiative had from the beginning.

First, the Chinese had actually recommended the site of the SND as the location for the SIP, but Singapore rejected the suggestion. Instead, Singapore selected another location in Suzhou for the SIP.

“Big mistake,” Mr Yeo explained. “I told Lee Kuan Yew that we should never have taken that place.”

Mr Yeo, before he was roped in to manage the SIP project, had been involved in another industrial park project in Wuxi. There, the location of the park was chosen by the Chinese, he said.

The second mistake with the SIP was the ownership split between Singapore (65%) and China (35%).

“We got 65, they got 35, why should they cooperate with us?” Mr Yeo asked. “At SIP, they get 35 cents for every $1. At SND, they get the whole dollar.”

The Singapore government had asked the Chinese side “to suspend marketing of their industrial park [the SND] for five years, making the Singapore-built park the only focus of development for the city for that period. But the officials refused.” (New York Times)

The problems seemed intractable. SM Lee asked Mr Yeo what he would do about the project.

“I said to withdraw,” Mr Yeo explained. “Give them the majority.”

SM Lee asked when Mr Yeo would do this.

“Now,” he replied.

By 1999, the Singapore consortium involved in the SIP had reportedly lost US$90 million.

In 2001, the two sides agreed to swap majority stake. China now would take 65%, and Singapore 35%. It was an embarrassing period for Singapore, having to give up its majority stake just 5 years after the project started. And at the handover, only 8 square kilometres of the project were completed.

The next year, for the first time, the Chinese made a profit of US$7.6 million from the SIP.

“In the Suzhou case, we started on the wrong footing and with the wrong concept,” Mr Yeo said in the book. “It was all wrong. My job was to repair. But it was too much for me.”

The failure of the project was predicted by one of Singapore’s founding ministers – Goh Keng Swee.

“When Lee Kuan Yew announced they were going into Suzhou, Dr Goh Keng Swee called me up,” Mr Yeo recalled. “He said: ‘This project will fail and they will call for you’.”

Mr Yeo added that Dr Goh, who had earlier been an economic adviser to the Chinese government, “was against the concept from the beginning.”

The SIP was at the time part of Singapore’s push to build an economic “second wing” outside the island, and the SIP was one part of hitching onto the rise of China to sprout this wing.

Despite the failure of the SIP collaboration, Singapore and China have gone on to successfully cooperate on other projects, such as the Tianjin Eco City and the Chongqing development, for example.

As for Mr Yeo, he has since stepped down from the Civil Service and presently runs his own consultancy, the Economic Development Innovations Singapore (EDIS), exporting his decades of expertise in development to other countries.

“Neither Civil Nor Servant” gives rare insights into the many initiatives Mr Yeo had been involved in, including his time in the Ministry of Defence where he first came under the mentorship of Dr Goh (one of three bosses he had), at the EDB which he is most recognised for, with A*Star and the controversies which surrounded it, and his venture in the sciences with the Biopolis. In-between these, he helped develop the Indonesian islands of Batam and Bintan as well.

Mr Yeo, in his inimitable style, also speaks bluntly about some of the more public spats he had, such as the ones with a PAP MP who had slammed him in Parliament, the quarrel with the daughter of Lee Kuan Yew, and the skirmish with a blogger over the scholarship issue.

The book gives one a broader understanding of the tireless work the 71-year old has rendered to the country, and by the end of the book, one is filled with not only admiration at his dedication to nation building, but also his deep sense of responsibility to workers which, at the end of the day, was what it was all about – people.

Everything he did, he said, is about “jobs, jobs, jobs” for Singaporeans, above all.

“Neither Civil Nor Servant” is published by Straits Times Press and is available in major bookstores.