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Working with Markets - Harnessing Market Forces and Private Sector for Development Launch
Learn more about the four aspects of working with markets in the context of land and infrastructure development and pushing sustainable urban development with public-private partnerships.
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Lecture details
Working with Markets - Harnessing Market Forces and Private Sector for Development Launch
19 October 2017
3:30pm – 5:00pm. Registration from 3.00pm, seated by 3.30pm
URA Function Hall
Lecture video
Synopsis
The term "working with markets" captures the fine balance of successful public-private collaboration. Why is working with markets necessary in Singapore, and how has it shaped our development landscape? What were the challenges and benefits, and how can we calibrate between public and private involvement? This CLC Lecture examines four aspects of working with markets in the context of land and infrastructure development - transforming the physical landscape through the government land sales programme; navigating the statemarket relationship; building up the national infrastructure with government-linked corporations; and pushing sustainable urban development with public-private partnerships.
Lecture report
Why did (PPPs) like waste-to-energy and desalination plants in Singapore work? Because the regulatory risk was taken from the private sector. (The private sector didn’t have to) worry about how much to charge citizens for their water. Those were government decisions, the government was the single buyer, the (companies just had to) deliver the water promptly and with the right quality. Then companies can bid on that understanding, the process is transparent. - Low Sin Leng
The successful development of Singapore is built upon the partnership of the public and private sectors. How this has been achieved over the decades was the subject of discussion amongst veterans from the country’s civil service and private sector at the CLC’s “Working with Markets” book launch lecture and panel discussion on 19 October.
Low Sin Leng shares her thoughts with the Centre for Liveable Cities. Source: CLC
From the Housing and Development Board (HDB)’s early days of industry and capability building to the Urban Redevelopment Authority (URA)’s on-going Government Land Sales programme, the Singapore government has a long history of engaging the private sector as key partner.
Low Sin Leng, who held senior positions in the finance, trade and industry and education ministries, and later in the private sector, summed up the government’s approach as such:
“There were two key aspects to working with markets: the engagement and partnership with private enterprise through public-private partnerships, and harnessing market forces through a competitive pricing and bidding system to allocate and set prices for scarce resources.”
Underlying both government’s approach is the recognition that neither they nor the market was perfect, she added. “Therefore, we must be candid and assess who is capable of doing what.”
Low recalled how in the mid-1970s, many held the opinion that the private sector could do everything better than the government. The late senior Permanent Secretary, Sim Kee Boon, thought otherwise. At a closed-door discussion with Administrative Service offers, Low recalled him saying, “Many of Singapore’s statutory boards have done wonderful jobs in building up Singapore’s economy. So please (don’t assume) that the private sector will always do better. It always depends (on various factors).”
In Low’s opinion, the key determinants of success for private public partnerships are an alignment of interests, complementary capabilities, efficient execution by the private sector, and importantly, effective monitoring by the government. “There has to be appropriate risk-sharing. You need transparency and clarity, and the public sector has to bear the regulatory and political risk,” she said.
Evolving with the times
Over the decades. the government has engaged markets in different ways to meet changing social and economic trends. The Government Land Sales (GLS) programme is one example said URA’s former senior adviser and group director Choy Chan Pong.
1983 –1990s: Transformation of Tanjong Rhu. Source: Choy Chan Pong
As a means to leverage the private sector’s expertise, ideas and financial resources to achieve important planning, development and economic goals for Singapore, the programme has evolved to support urban renewal of the city centre, the development of hotels and tourism facilities, commercial spaces, the conservation of built heritage and the development of new growth areas.
This continuous innovation was based on the understanding that this programme was market-based and market-oriented in its planning and implementation, said Choy. This was why URA also emphasized a lot of transparency and clarity. He added that the success of the GLC was built on “a close link to planning and development objectives.”
“We made sure to understand the market well and that the focus of the GLS shifted with market trends and needs. But we also knew that the market is not perfect — in designing GLS processes and policies, we had to make sure that there would be controls to preempt market failures such as speculation and land-hoarding,” said Choy.
Panel discussion during the Working With Markets Lecture
Another example of how the Singapore government has shifted in its role in the market how HDB went from a builder of public housing estates to helping develop a building industry. The agency’s former Chief Structural Engineer, Er Lau Joo Ming, recalled HDB’s commitment to upgrade the industry even led them to set up a company as a way of demonstrating to contractors how things were done.
“In the pioneering years, HDB had to run quarries (and other resource management projects). We just had to do the job. But we had to do it in such a way that we didn’t hollow out (the industry). We had to do it in a way that (saw) our local companies grow with us, and eventually take over,” he said.
“The big questions are: Why should government intervene? What are the pitfalls? What are the desired outcomes? There must be a time to go in, and a time to come out.”
Lessons from Singapore’s PPPs
Beyond working successfully with the private sector, Singapore has also seen participated in the market via its government-linked companies. These have grown globally despite the lack of publicprivate partnerships (PPP) in Singapore, notes Prof Phang Sock Yong from the Singapore Management University. Citing PSA and Changi Airport Groups as two companies with substantial overseas revenue, she said they are proof that growth can be achieved without private ownership.
The panellists were each presented with a copy of the Urban Systems Studies book
Even so, the performance of PPPs is determined by how well they are integrated. Speaking about Singapore’s largest PPP to date, the Singapore Sports Hub, Professor Phang explained that, “The more services you put together under a PPP, the harder it is to identify a private sector partner able to deliver all the requirements.”
The hub involved design, build, finance and operation, and the professor notes there is a trade-off between how much to bundle in one PPP versus the lost efficiencies and synergies when there are too many parts. Unlike a power plant or desalination project where there is only a single output, a project like the hub is much more complex with multiple, difficult-to-measure performance specifications.
“When these synergies and efficiencies are lost, the difference in performance can be very significant,” she said. “Understandably, the risks and returns are correspondingly greater.”
Written by Alvin Chua, edited by Justin Zhuang. This report first appeared in the Nov 2017 Better Cities newsletter.
About the Speakers
PANELLIST
Choy Chan Pong
Former Senior Adviser
Urban Redevelopment Authority
Choy Chan Pong was the Group Director in URA who was responsible for the planning and implementation of the Government Land Sales programme for more than 20 years, up to 2010. He introduced the auction method and the Reserve List System, oversaw the sale of the Business and Financial Centre site and was involved in the sale of Integrated Resort site at Marina Bay.
PANELLIST
Er. Lau Joo Ming
Senior Adviser,
MOH Holdings
Er. Lau Joo Ming is the Senior Adviser to MOH Holdings. He is an Adjunct Professor at Nanyang Technological University. Er. Lau is a Board member of National Health Group, a member of Development Projects Advisory Panel, and a member of the Panel of Experts in Centre for Liveable Cities.
PANELLIST
Low Sin Leng
Former Senior Advisor and Executive Chairman
Sembcorp Development;
Chairman, Nanyang Academy of Fine Arts
Low Sin Leng started her career in the Government Administrative Service, holding senior position in various Ministries: Trade & Industry, Finance, and Education. She was seconded to Singapore Power in 1995 and joined Sembcorp Industries in 2000. After retiring as Executive Chairman of Sembcorp Development in 2012, she served as Senior Advisor till 2016, and holds some Board Directorships. She is currently Chairman of the Nanyang Academy of Fine Arts.
PANELLIST
Prof. Phang Sock Yong
Celia Moh Chair Professor & Vice Provost
Singapore Management University
Prof. Phang Sock Yong is Celia Moh Chair Professor and Vice Provost at the Singapore Management University. She has published several articles on housing, transport, and public private partnerships. Her books include “Housing Finance Systems” and “Housing Markets and Urban Transportation”.
MODERATOR
Wu Wei Neng
Wu Wei Neng holds adjunct appointments at the Centre for Liveable Cities and the Civil Service College. He also works at Freedom to Create, and international non-profit organisation focusing on governance and public policy. Prior to this, he served in the Ministry of Defence and Ministry of Trade and Industry.
