K. Kesavapany, Director of the Institute of Southeast Asian Studies, outlines the complementary strengths of Asia's key business cities - Hong Kong, Shanghai and Singapore. Photo credit: Asia Society

Hong Kong, Shanghai and Singapore are the three cities under the global spotlight to lead the future of Asia's economic growth, according to the Singapore-based Director of the Institute of Southeast Asian Studies, K. Kesavapany.

At an Asia Society event in Hong Kong, Mr Kesavapany, Singapore's former Permanent Representative to the United Nations, pointed out that the three cities, long seen as healthy competitors, are in fact in a prime position to co-operate and ensure the stability and success of Asian economies worldwide.

Referring to a 1992 speech by former Singaporean Prime Minister Lee Kwan Yew, he spoke about the ‘tale of two cities', when both Singapore and Hong Kong were seen as the ‘trading beach-heads to vast hinterlands' and ‘pioneers of modernisation of their regions'.

HK's strengths 'constant'

Revisiting this position, Mr Kesavapany said: "Hong Kong's strengths have remained constant over the decades. They include an experienced and skilled workforce, the flexible system, entrepreneurial talent, a remarkable trading tradition and service know-how, the supportive Government and the geographic location vis-?vis China."

While Hong Kong and Singapore have often been compared and contrasted, with the rise of Shanghai in the early 1990s, this quickly graduated to a more seductive three-cornered comparison game.

The reality is that all three cities are economic dynamos, Mr Kesavapany said, and more was to be gained from co-operation than competition.

He noted how China's rapid development meant that both Hong Kong and Singapore had to go through a hollowing-out process as industries relocated to lower-wage locations.

"The re-inventing of Hong Kong into a service economy hub for Southern China is testimony to the entrepreneurial spirit and creative solutions of Hong Kong. Similarly, Singapore has both enhanced its links with its ASEAN neighbours and simultaneously worked towards becoming a global hub in select niche areas."

Of Shanghai, Mr Kesavapany said: "Over the next decades, the gap between Shanghai and Hong Kong will surely narrow, as Shanghai improves not only its port/airport/infrastructure, but also its software in the form of talents and people's know-how."

A win-win approach

Mr Kesavapany emphasised that the more dynamic and successful Shanghai becomes, the more reason there is to believe that it can have a positive impact on both Hong Kong and Singapore.

He said each city serves as a hub for its respective hinterlands - Shanghai for the Yangtze River Delta; Hong Kong for the South China region and the Pearl River Delta; and Singapore for South East Asia.

"There should be enough economic growth and sustenance for all three as the Asian boom continues, powered by India, Japan, South Korea, ASEAN and China. The challenge is how to transform a zero-sum mentality into a win-win approach," he added.

Each of the three cities could play key roles as hubs in helping to build the East Asian community. They were already serving as important transport and logistics bases, hosting key Asian ports, airports and communication nodes. "By working together," he said, "their synergy will help improve the efficiency and competitiveness of Asian industries and exports."

One large area of co-operation is in raising finance to develop Asian infrastructure, since the three cities are financial hubs. According to the World Bank, developing countries in East Asia need more than US$1 trillion of infrastructure improvements to cope with expanding cities and populations. In light of this, "the three cities could play co-operative and catalytic roles to mobilise capital and resources."

A vision for the future

Mr Kesavapany had a number of suggestions for Asia's three leading cities:

• cross-investing to create vested interests in each others' success
• be catalysts of modernisation to form hubs of education, knowledge and culture
• build a regional identity by stressing tolerance for others' values, religion, language and culture
• utilise existing networks and connections to promote trade, investment, connectivity and knowledge in East Asia
• exploit Hong Kong and Singapore's rule of law and level playing fields to benefit the regional community.

Mr Kesavapany was confident that all three cities, by working together, would become stronger, richer and more progressive.