Very few countries are indifferent when foreigners take over what are generally considered iconic or strategic assets, and so the uproar and opposition to the proposal by SGX, the Singapore stock exchange, to buy out ASX, its Australian counterpart, is only to be expected. Unfortunately, for the purchase to go through, changes are required to Australia’s Corporations Law, which currently limits any single shareholder in ASX to a 15-percent stake.
Naturally, preliminary discussions would have been held to explore the chances of this. ASX Chief Executive Robert Elstone was reported by the Straits Times on 26 October 2010 to have said “If those discussions were negative, we would not be sitting here.”
However, if the press reports of the last few days are any guide, SGX and ASX may be underestimating the strength of feeling on this. They may also have been too quick to discount the political reality that the Labour Party does not by itself have a majority in the House of Representatives. Julia Gillard’s government depends on the support of Adam Bandt, a member of the Green Party and three conservatively-inclined Independents, Andrew Wilkie, Rob Oakeshott and Tony Windsor.
In the Senate too, the Green Party holds the balance of power.
While Oakshott and Windsor have said that they would await the government’s review and recommendations, the other two have now declared their opposition to the deal.
The Wall Street Journal, 28 October, reported that Andrew Wilkie challenged the government to convince him that the SGX proposal was in Australia’s interest. “At this point in time I would not support any move to sell the ASX to Singapore or to interests in Singapore,” Mr. Wilkie said. “I think the ASX is too fundamentally important to our economy and to our sovereignty.”
Bob Katter, another Independent in the lower house, but not aligned with the Labour government, said, “I have a desire some things in my country are left owned by my country. I do not wish to live in a country of serfs working for foreign landlords.”
The Green Party’s Adam Bandt was just as blunt, with the same newspaper quoting him that it is “not in the national interest to have our stock exchange part-owned by the Singapore government – a government where there is no democratic opposition.”
The Singapore government has a minority stake in SGX.
Bandt was echoing his party leader’s strong opposition to the plan. Announcing the Green Party’s intention to block the merger, Bob Brown recalled that Lee Kuan Yew once referred to Australia as the “poor white trash of Asia” and noted that Singapore executed an Australian citizen, Nguyen Van Tuong, for drug-smuggling in 2005.
“This is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse,” Brown said. “We don’t see an advantage for this nation in having that stock exchange controlled from Singapore.”
Not all voices are against the merger. Particularly from business interests, there are those who support the proposal.
The problem, as mentioned above, is that legislative change is needed. It would be difficult enough if all that was needed was regulatory approval by the executive branch of government — explaining a government decision to allow a deal to proceed in the face of strong public opinion is never easy — but a parliamentary vote is a far higher mountain to climb. Members of Parliament, ever sensitive to their voters’ feelings, need to be convinced. The Green Party particularly seems to have said the kinds of things it cannot easily backtrack on, and this is the party that holds the balance of power in the Senate. Might the Gillard government consider it safer to not even take on this fight, and not even recommend approval of the deal?
I cannot predict how this saga will turn out. SGX may well succeed in the end. But there are lessons nonetheless that Singaporeans need to be aware of.
What will have struck readers is how quickly Singapore’s democratic deficit and poor human rights record have been brought into the fray. No doubt, the primary motivation for objecting to the SGX-ASX deal is nationalism, but it is certainly handy for objectors to have at their disposal an image of Singapore that turns people off. It makes a difference to the intensity of opposition.
Selling something important to a foreigner is never easy. It is harder the more alien that foreigner is. As it is, we are ethnically and culturally very different from Australians, but if on top of that, our politics and governance are also distasteful, then we should recognise that it will always be doubly difficult for Singaporean companies to consummate deals.
On the one hand, Singapore wants to be accepted by the rest of the developed world as a respectable member so that we can do business with others with the least friction and on the most favourable of terms. On the other hand, we regularly thumb our noses at these partners when it comes to political decency and human rights. We would be deceiving ourselves if we thought that the second did not affect the first.
So long as our politics stink, Singaporeans and Singapore companies will always be doing business with the rest of developed world with some handicap. We will always trade at a discount. Deals which may be possible for American, European or even a Japanese companies, in Australia – or Europe or America – will not possible for Singaporean ones.
In our single-party-dominant state where the government insists on controlling the media agenda, Singaporeans have been instilled with the idea that business and politics can be separated. Many among us live that dictum. They concentrate on business, their careers or their professions, and proudly claim they have little interest in politics, a renunciation that only underlines their fear of getting involved in the risky side of life.
But that separation between business and politics is a fantasy. We may yearn to believe that fantasy for our own personal security here in Singapore, but it does mean that the world really operates like that. The uproar over the proposed SGX-ASX deal is a good example of reality.
In economics and business, we will never be part of the First World unless our politics and human rights rise to the same standard, and that won’t happen until Singaporeans realise that a mutilated democracy and poor human rights are not cost-free in dollars-and-cents terms, and set about demanding better.