The smelly guy who wants to enter the rich man’s club

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.

23 Responses to “The smelly guy who wants to enter the rich man’s club”


  1. 1 natasha 30 October 2010 at 10:07

    Memory of sia vs qantas and SingTel buying Optus are being dug up. Concerns that while 25% on paper of sgx is govt owned, is the other 75% secretly govt owned too? A Singaporean reminded me: how would Singaporeans react if the position were reversed and Australia enter to buy your stock exchange? Nevertheless the govt ownership issue? The actual benefits and costs if the deal is not being discussed un either side except to say it would be the regional behemoth of stock market companies. It is emotive on all sides with powerful slanging words – undemocratic, xenophobic, racist (australia) and partisan. As an Aussie I feel uninformed about the actual aftermath of the deal but am concerned about ANY country having a significant stake in another direct economy if that was the outcome. But as I said, all I have to go on is two countries emotive media.

  2. 2 See the big picture 30 October 2010 at 11:12

    Not so simple lah. If politics and human rights are an issue, why is it that China has lots of trade with Australia, especially in the mineral and resource sector? Or for that matter with the US and other countries?

    Yes politics and human rights may be an issue, but may not even be a major issue. When there are bigger stakes or other factors to consider, it may even become a non issue.

    That’s why the PAP government is not too concerned or embarrassed about having 98% seats in Parliament. Or why in order to uphold its reputation, clean governance and political stability, it went all the way to sue opponents till their pants drop. Or why, despite its imperfections, PAP had consistently obtained 60 over percent support at elections.

    At the end of the day, it is the big picture and tangible aspects that politicians and businessmen are concerned with and will make their decisions accordingly, not emotions or factors like political system, human rights or what not.

    • 3 Kirsten 30 October 2010 at 13:13

      China still gets to do big businesses with many countries because they are a fast-growing economy, a huge country with increasing amounts of clout on the global stage.

      Much as we like to believe in Singapore’s great economic success, we have to realise that we don’t have as much clout. Yes, we might be a success story and people might be impressed at what we’ve achieved, but it’s still nothing on the world stage. We haven’t got the multitudes of cheap labour, or space for sprawling factories, or many of the other investment opportunities that India and China are currently offering to attract investors.

      Investors might overlook human rights issues because their greed or their need to gain huge profits mean that it is a no-brainer to invest in India or China. But when it comes to Singapore, we don’t have the clout to get people to overlook the flaws, the lack of democracy and free speech. We can’t afford to not care about the bad impression we are giving.

    • 4 Ponder Stibbons 31 October 2010 at 07:13

      Trade is quite different from taking over a stock exchange. I suspect the Australians would be even more alarmed if a Chinese company wanted to buy ASX.

  3. 5 Jason 30 October 2010 at 15:13

    This is not the best case to illustrate a connection between business interests and human rights. The Australians would make just as much noise if it was a Chinese or Indian stock exchange doing the takeover. It is more about nationalism and perhaps even racism on their part.

    Separating politics and business isn’t a fantasy if you’re not dealing with the West. Singapore has sold power stations to Chinese companies, and made investments in Myanmar and nobody bats an eyelid. GIC and Temasek are even welcome with open arms when buying US bank stocks.

  4. 6 Anonymous 30 October 2010 at 18:15

    A snake must not swallow an elephant, because sooner or later, the snake will be forced to throw up the elephant.

  5. 8 prettyplace 31 October 2010 at 01:39

    A wonderful article, alex.
    how, so true and yet businessmen fear the risky side.
    In time perhaps, when the good returns start to dry,
    we may see more taking the path to participate.

  6. 9 Sophie 31 October 2010 at 09:32

    This is very true, while may I also add that the ASX IS truly a national asset of Australia and it SHOULD BE owned and managed by Australia. Of course, this will definitely concern their national pride. There are many such “national” debates going on over there as part of making Australia independent. One of the most popular ones is to get rid of the monarch and establish a truly Australian head of state, and of course, the more heated ones are about why they should get rid of the Union Jack on their flag. Such is the beautiful nature of their “Aussie Pride”. Undoubtly which has carried on for generations mainly for this reason that Australians come first before anything else. Strangely I felt this very strong ‘Aussie Pride’ energy during my sabbatical in Melbourne.

    Unfortunately, we cannot feel what is it like to have a “Singaporean Pride”, we are more ashamed of our country, more doubtful of our sovereignty (or rather have a lack of it), we feel more threathened than secured with our own assets and its no surprising given the negative outlook of the way the ‘Singaporean People in Power’ gives the non-Singaporeans a red carpet treatment. We obviously can’t help but feel sidelined, threatened, furiously competing with a foreign body, exactly like what a Minister said a few days ago in the ST that “Singaporeans should strive for excellence and not just settle for competence or they risk losing out to other countries”. So there sums up why the People in Power are not really into YOUR NATIONAL INTEREST.

    Sophie,
    A Not-So-Excellent-Peasant from Telok Blangah

    • 10 Xil 1 November 2010 at 11:27

      ‘Unfortunately, we cannot feel what is it like to have a “Singaporean Pride”, we are more ashamed of our country…’

      Who the hell are you to speak on behalf of all Singaporeans?

  7. 12 rukidding 31 October 2010 at 11:46

    I have a question for the pomes. “Remember the stolen generation?”

  8. 13 Fox 31 October 2010 at 22:25

    Why hasn’t anyone raised the spectre of racism? Why must it be down to Singapore’s lack of democracy? Could be merely veiled opposition to the the acquisition of a major Australian company by ‘brown’ people?

    If it were a Swiss or UK corporation that is buying over ASX, would there have been such a vocal opposition? What about if it were a Japanese company who had made the offer?

    • 14 Lee Chee Wai 1 November 2010 at 04:45

      I think you are probably barking up the wrong tree there, Fox. I do not see any palpable signs of racism, secret or otherwise in the objections of the Australians. Seems like a pretty straightforward expression of nationalism over what they view as, quite reasonably so, the potential loss of a national institution to foreign ownership.

      The fact that Singapore has such a lousy domestic track record for political and media freedom just gives the objectors more ammunition. I think some of these objections are even sound … if there is little or no media or corporate transparency in Singapore, how would they know to feel comfortable with business decisions made with the ASX (were they to take an interest, that is)?

  9. 15 Wang 1 November 2010 at 09:54

    YB et al

    In the end, what the noise and hullaballo highlights is “might is right” (ob perception) even for the so called liberal countries.

    Yes, there is a underlying racism which applies in all countries, even for Oz, as all you have to do is look at the articles once any Asian country wishes to merge or acquire a national asset especially a profit making one.

    Although in the end, filthy lucre might win but it is thru structures.

    The liberals will tread more carefully with Indonesia or Vietnam or Thailand or China.

    Does not this incident/article just proves the dicta that principles are easily put aside as this situational ethics at its best where even though rules are there and proper notifications done, but rules should be changed to the emotions to be raised.

  10. 16 Teck Soon 1 November 2010 at 12:37

    Is referring to Australia as “poor white trash of Asia” not a racist comment? Just substitute “white” for your own race and see how you would feel if an Australian politican made that statement.

    • 17 cynic 2 November 2010 at 17:34

      Yes, Aus was poor white trash when it was implementing its racist white Autralia policy and the stolen generation thingy.
      that comment was made by MM Lee during the height of Aus racism.

      • 18 El Corregidor 21 November 2010 at 17:34

        ummm… I seem to recall that comment being made in the 1980s.

        The White Australia Policy was abolished in 1973, and the stolen generation “thingy” finished in the late 1960s.

  11. 19 Aaron W 1 November 2010 at 15:04

    Political decency indeed. After a decade of political arrogance and regional ignorance courtesy of the Liberal party, followed by the recent deposing of our Prime Minister by a Labor Party clique who felt their actions should not concern the voting public, Australian politicians ought to be considering their own sense of political decency. The government asset sell-offs during the Howard Era (96-07) were irresponsible enough … but a potential takeover of the ASX?

    Human rights track record or any other such beef with the Singaporean government are not the issue here. Rather, our politicians should simply be considering their own responsibility to the Australian people and our national interest when giving up yet another asset, a major part of our infrastructure, to any foreign interest.

  12. 20 wikigam 2 November 2010 at 01:03

    Singapore leaders always told that the citizens haven’t ready /prepare yet for Legal of Homosexual and so on..

    Conclusion is Singapore leaders haven’t ready / prepare for a complex political games of globalization.

  13. 21 J 9 November 2010 at 10:45

    “Selling something important to a foreigner is never easy.”

    The people who sold off our power stations clearly didn’t have any trouble doing so.

    As an aside, I somehow feel ‘nationalism’ doesn’t really accurate describe the scenario. It gives the impression that sentiment overrode an otherwise rational proposal. But there is good reason, economically and politically, for ASX to remain in Australian hands.

    You know, just like Singapore’s power stations.

    • 22 Mage 9 November 2010 at 15:24

      Hmm, our GLCs still retain some shares over these ‘foreign firms’.

      Indirect or directly, our policies regarding energy have always been tightly regulated to serve our interests🙂

  14. 23 -M- 15 November 2010 at 18:32

    Perhaps this is not a good example to illustrate the points that YB is trying to get across with this article.

    I would say the opposition from the Aus is more complex than what has been quoted, our poor track record doesn’t help, and in this instance, provided them a convenient excuse to mask the real reasons/problems.


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