Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Human realities behind the Singapore Free Trade

The human realities behind the Singapore Free Trade Agreement - Aziz
Choudry, GATT Watchdog

The Singapore and New Zealand governments are selling their new free trade and investment agreement as an abstraction, unlinked to people’s lives. On Batam, Indonesian territory forty minutes from Singapore by boat, I recently saw the human realities that lie behind the deal.

This agreement has already been dubbed a “Trojan Horse” for a possible new trade bloc covering South East Asia, Australia and New Zealand. Trade Minister Jim Sutton wants to assure us that proposed rules of origin for goods covered by the deal will prevent Singapore being used as a new backdoor to product from low-wage Asian factories. A recent briefing paper states: “The rules of origin applied to goods traded between New Zealand and Singapore recognise the economic circumstances of Singapore as a city state”.

Another Trojan Horse lurks in these special “economic circumstances”. “Made in Singapore” can mean as little as 40% of the product’s value comes from Singapore. The last process of manufacture must be performed in Singapore and cannot be minimal (eg packaging). But it might simply involve pressing and labelling garments made offshore. This means competition not only between New Zealand and Singaporean workers but also low-waged Indonesians on Batam.

In 1968, Batam, in Indonesia’s Riau province, was nearly all rainforest, with 3000 inhabitants. A bonded free trade zone since 1978, it now boasts 13 industrial parks and about 400,000 people, predominantly migrant factory workers. The Suharto regime invited foreign investors, mostly from Singapore, Taiwan and Japan, to build electronic and other middle-size factories, resorts, and golf courses there. Transnational corporations based in Singapore and Singaporean companies have relocated to Batam, attracted by a large pool of cheap, trainable labour and available land. Singapore’s former Ambassador to Indonesia stated the intention was “a free flow of goods, services and investments between Singapore and Batam so that the industries which were located in Batam will support industries in the region to be more competitive for export to Europe, USA and Japan”.

Exports from Batam grew to US $1.3 billion by 1994. By 1998 350 foreign companies operated in Batam and private investment surpassed US $6.5 billion. Singapore remains the largest investor there - of the 35 companies which set up in the first half of 1998, 10 were Singaporean.

Batam is the apex for the Singapore - Johor (Malaysia) - Riau economic growth triangle, mooted in 1989 by Singapore Prime Minister Goh. This has enabled relocation of industries with conventional technology which had lost their competitive advantage in the world market while they were located in Singapore. With scarce land and higher wages, Singapore has used Batam and Johor to expand its economy regionally, strengthen its economic advantage and enjoy lower costs. Investors on Batam are exempt from income tax and VAT for up to five years. Foreigners may own 100% of their business. Imports are duty free, including raw materials, machinery, other equipment and spare parts. There are no stamp duties on the import of capital goods.

Jakarta has spent many millions on developing Batam’s essential infrastructure. Singaporean capital has developed investment parks and a project aimed at supplying water to Singapore. I visited the showpiece BatamIndo Industrial Estate, home to around 80 companies, a joint venture between a consortium of Singaporean companies (led by Singapore government linked company, Singapore Technologies, which controls Computerland in New Zealand) and a consortium of Indonesian investors.

I jotted names down: Oki, National/Panasonic, Philips, Matsushita, Viking, Kyocera, Sony Chemicals, Epson, Ciba Vision, Singacom, Novartis, Shimano, Sanipak…. Electronic and computer-related industries dominate on Batam, including factories assembling computer components and parts, audio and video equipment, auto parts. After assembly, parts mostly return to Singapore, to be included in product marketed from there and exported as “made in Singapore”. Significantly, given the proposed removal textiles, clothing and footwear tariffs under the Singapore free trade agreement, other factories manufacture leather goods, shoes, garments, and toys.

Visitors to Batam could be distracted by the shiny factories and good roads and miss the human costs of this model of economic integration. But survival is tough for workers drawn from across Indonesia. There are no unions and few family or community support networks. Recent ethnic clashes left dozens dead, scores seriously hurt, and hundreds fleeing their homes. Around 2,000 troops were dispatched last July to buttress local security forces. Houses, cars and motorcycles have been torched. Bataks, originally from North Sumatra, have clashed with migrants from Flores over control of local transport routes. National and local authorities have tried to play down the conflict.

The minimum monthly wage for factory workers is 425,000 rupiah (around US $51). Virtually all food is imported. Prices tend to be higher than Jakarta. Over 60000 workers work in BatamIndo. Many live in company dormitories, which like the factories, are ringed by high fences, barbed wire and security guards. Religious and ethnic tension is common in the dormitories. Illegal shantytowns contrast with the Batam business elite’s gleaming mansions. Meanwhile, in karaoke bars and resorts, legions of sex workers wait for mostly Singaporean clients.

The speech from the throne last year said "legitimate issues of labour standards…need to be integrated better with trade agreements’. When Singapore rejected such demands, our government quickly acquiesced. When “free trade” itself leads to human misery and exploitation such as that in Batam, it is hardly surprising that many trade unions and peoples’ movements smell hypocrisy in official calls to link free trade and investment agreements with such standards.

While free trade and investment remains the ultimate goal, how can we rely on any government to respect workers rights when the intention is clearly to trade such concerns away at the drop of a hat?

Singapore has huge financial, political and economic investments in Batam and the growth triangle. The international competitiveness of much of its industry depends on these production mechanisms. Are we to seriously believe that any of this will change for a trade agreement with New Zealand?

- NOTE: Aziz Choudry, of GATT Watchdog, visited Indonesia in August.

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On National’s Rampant Pandering To The Farming Vote

What on earth has happened to the political parties n the centre-right? Once upon a time in the US, the party of Lincoln was a respectable political party before it devolved into the cult of Trump. Here at home, the National Parry used to be able to manage and administer the economic orthodoxy in a reasonably competent fashion. Now it can barely do simple addition and subtraction. Something must have gotten into the water, and not simply out on the farm... More>>

 

Winston Peters Speech: The Gathering Storm Clouds: Ihumatao

Frequently around New Zealand you hear people say that politicians are all the same. It’s a convenient way to dismiss any careful investigation of the truth of that statement. New Zealand First since its inception has been committed to ‘one law ... More>>

ALSO:

National Agriculture Policy: Will Restore Farmer Confidence And Pride

A National Government will reduce regulatory burden and give farmers confidence for the future. Leader of the National Party Judith Collins and Agriculture spokesperson David Bennett announced National’s Agriculture policy in Gisborne today. “Agriculture ... More>>

ALSO:

Shaw: Wealth Tax Not A Bottom Line For Green Party But They Will Push For It

Green Party co-leader James Shaw says one of his senior MPs misspoke under pressure when she said a wealth tax was one of the party's bottom lines. More>>

ALSO:

Government: More Border Exceptions For Critical Roles

The Government has established class exceptions for border entry for a limited number of veterinarians, deep sea fishing crew, as well as agricultural and horticultural machinery operators. “Tight border restrictions remain the backbone of the Government’s ... More>>

ALSO:


Gordon Campbell: On Last Night’s Leaders Debate

Do political debates change voter intentions, and cause voters to switch sides? According to a 2019 Harvard Business School study conducted across 61 elections in nine countries involving 172,000 respondents, the answer would seem to be a resounding ... More>>

ALSO:

Dunne Speaks: The Election Campaign Just Grinds Slowly On And On

With just over three weeks until the General Election, the release of the first major pre-election opinion poll this week confirmed what was already being reported about this year’s campaign. Although the gap between Labour and National has narrowed ... More>>

Electoral Commission: Candidate And Party Lists Released

17 registered political parties and 677 candidates will be contesting the 2020 General Election Nominations have now closed and the Electoral Commission has released the electorate and party list candidates for 2020 online at vote.nz . Advance voting ... More>>

National: Plan To Restore NZ’s Prosperity

National’s Economic and Fiscal Plan carefully balances the need to invest in infrastructure and core public services while also reducing tax pressure on Kiwi families and businesses. National Leader Judith Collins and Finance spokesperson Paul Goldsmith unveiled National’s ... More>>

ALSO:

NZ First: Party List

New Zealand First has a proven twenty-seven-year history of bringing balance and common sense to our government. Amid the continued setbacks of COVID-19 restrictions, New Zealand First has once again sustained its profile by selecting a strong team ... More>>


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels