Asian Hub Research Articles

The impact of the institutional environment on the venture capital industry in Singapore

Venture capital in most of Asia may be more accurately termed a private equity industry which focuses on funding mature firms in slow growth sectors of the economy rather than on funding start-ups. However, the venture capital industry in Singapore is becoming substantially different from that of much of Asia in that it funds high technology startups. The industry in Singapore has grown substantially in recent years, with funds under management growing from about US$20 million in 1983 to more than US$7 billion in 1999. These developments together with the government's efforts to make Singapore a venture capital hub for Asia motivate our examination of the venture capital industry there. Institutional theory frames this analysis of the emergence of the venture capital industry in Singapore and the distinctiveness of its evolution. Employing a replication logic methodology during 16 in-depth interviews with venture capitalists and senior government officials, it is found that the institutional environment, particularly the regulatory environment created by the government and its agencies, helps to explain key differences in the Singapore venture capital industry compared with that of the rest of Asia. Cognitive (cultural) institutions also impact how venture capital firms operate in Singapore, particularly causing foreign venture capitalists to adapt their methods to the local cultural setting. Our results highlight the importance of the institutional environment, particularly of the government, in guiding the emergence and evolution of the venture capital industry.

Air Cargo Services, the State and Industrialization Strategies in the Philippines: The Redevelopment of Subic Bay

In 1995, the American airfreight and package express firm FedEx established its principal Asian hub at the site of a former naval base in Subic Bay, the Philippines. The new hub transformed the stature of this peripheral region within an international economy in which air cargo services perform an increasingly critical integrative role. After the new hub was launched, Subic Bay's early success in attracting foreign direct investment, particularly from Taiwan, made it a paragon of the Philippine government's emphasis on export-oriented industrialization. However, the development impact of the hub was complicated as its positive effect was mediated by the tension between liberalization and rent-seeking practices. That tension was illustrated vividly by the Philippines' suspension of most air services to and from Taiwan for several months in 1999 and 2000. The suspension of services damaged the Philippine government's drive to attract foreign capital, but ironically, FedEx, as an American carrier, was not affected by the Taiwan-Philippines conflict; its Subic hub remained a well-integrated enclave of the global economy and continued to attract new investment, albeit from different sources. The impact of the conflict on Subic Bay illustrates both the vulnerability and the flexibility of peripheral industrial enclaves. En 1995, la sociétéde fret aérien et de courrier express américaine FedEx a établi son principal centre sur l'emplacement de l'ancienne base navale dans Subic Bay, aux Philippines. Le centre a transforméle statut de cette région périphérique située au sein d'une économie internationale dans laquelle le fret aérien joue un rôle intégré de plus en plus essentiel. Suite au lancement du nouveau centre, Subic Bay a réussi àattirer de l'investissment direct étranger, notamment en provenance du Taiwan, ce qui a incitéle gouvernement des Philippines à mettre l'accent sur une industrialisation vouée àl'exportation. Cependant, le potentiel du centre a étécompliqué parce que son effet positif a étéinfluencépar la tension entre les processus de libéralisation et la poursuite des rentes. Une telle tension est parfaitement illustrée par la décision du gouvernement des Phillipines de suspendre la plupart des services aériens à destination et en provenance du Taiwan pendant plusieurs mois en 1999 et en l'an 2000. La suspension des services a portéatteinte àla campagne du gouvernement des Philippines destinée à attirer de l'investissement étranger mais, ironiquement, FedEx, en tant que compagnie aérienne américaine, ne fut pas touchépar le conflit entre le Taiwan et les Philippines, et le centre à Subic est restéune enclave bien intégrée de l'économie mondiale et a continuéd'attirer de nouvel investissement, bien que des sources différentes. L'impact du conflit sur Subic Bay démontre à la fois la vulnérabilité et la flexibilité des enclaves industrielles périphériques. Im Jahre 1995 errichtete die amerikanische Luftfracht-und Paketbeförderungsfirma FedEx ihre asiatische Hauptgeschäftsstelle auf den Philippinen auf dem Gelände der ehemaligen Marinestation in Subic Bay. Die neue Zentrale bedeutete eine grundlegende Veränderung der Stellung dieser peripheralen Region in einer internationalen Wirtschaft, in der Luftfrachtdienste zunehmend eine kritische, integrierende Rolle spielen. Die Eröffnung der neuen Zentrale ließ Subic Bays anfänglichen Erfolg als Anziehungskraft für Direktinvestierungen vom Ausland, besonders von Taiwan, zum Musterbeispiel Export-orientierter Industrialisierung werden, um die es der philippinischen Regierung sehr zu tun war. Die Auswirkung der Geschäftsstelle auf die Entwicklung überhaupt war jedoch kompliziert, insofern als ihre positive Wirkung durch die Spannungen zwischen Liberalisierung und dem üblichen geschäftlichen Verfahren, Miete zu verlangen, herbeigeführt wurde. Diese Spannung wurde anschaulich illlustriert, als die Philippinen in den Jahren 1999 und 2000 die meisten Flugdienste von und nach Taiwan für mehrere Monate stillegte. Die Stillegung war den Bemühungen der Regierung, ausländischem Kapital attraktiv zu erscheinen, abträglich, doch auf FedEx, einen amerikanischen Transportunternehmer, wirkte der Konflikt zwischen Taiwan und den Philippinen sich nicht nachteilig aus: seine Zentrale in Subic blieb eine gut integrierte Enklave der globalen Wirtschaft und weiterhin attraktiv für neue Investierungen, obschon nun von anderen Quellen. Die Auswirkung des Konflikts von Subic Bay illustriert Verletzlichkeit und Flexibilität am Rande gelegener industrieller Enklaven.

Malaysia’s MSC and Singapore’s Status as Southeast Asia’s Technology Capital

This paper presents the growth and prospect of Malaysia’s Multimedia Super Corridor (MSC) and its impact on the region especially on Singapore. Located at the hub of Asia’s fastest-growing markets, Malaysia’s MSC is a bold initiative–a regional launch site for companies developing or using leading multimedia technologies. Aiming to revolutionize how Malaysia does business, the MSC will unlock multimedia’s full potential by integrating ground-breaking cyberlaws and outstanding information infrastructure in an attractive physical environment.Malaysia’s ambitions to transform itself into a Southeast Asian hi-tech powerhouse clearly have implications for well-wired Singapore. This paper basically addresses the different questions: Is Malaysia a real threat to Singapore’s hi-tech supremacy? What are the conducive policy issues Malaysia will consider to achieve its goal? What are the obstacles Malaysia would face to implement its plan? Is there any provision to protect cyberproperty?The paper concludes with a look at the prospect of entropy and shows that it will not affect Singapore because that country keeps abreast of technology and preserves its cutting edge on competition and survival.

Airline hubbing and airport economics in the pacific market

Transpacific hubbing over Tokyo's Narita airport, which is beset by severe capacity problems while serving a high proportion of nonlocal passengers, is explored from both a historical and an economic standpoint. Tokyo developed into Asia's dominant transpacific gateway because it was within range of the continental U.S. for the first generation of transcontinental jets. Its dominance continued after the introduction of the B747, while a more dispersed pattern of service developed on the U.S. side of the transpacific route system. Reasons for Tokyo's continuing dominance include its strong local market and the liberal fifth freedom rights of U.S. airlines out of Tokyo. A model of airline network competition is applied to the U.S.-Asia market. The model simulates the behavior of profit-maximizing airlines with different network types and hub locations, finding states of Cournot equilibrium. In a baseline run corresponding to the 3rd Quarter, 1985 system, the predicted transpacific network corresponds quite closely to the actual one. The impacts of demand growth, high terminal costs at Tokyo, and strengthened connectivity of alternative Asia hubs are then explored. Tokyo traffic is found to increase at a somewhat slower pace than overall demand as new non-stop services become feasible. Connecting traffic through Tokyo is found to be highly price sensitive because of the availability of alternative routings. Strengthening the connectivity of alternative Asian hubs, on the other hand, has a fairly modest effect on the distribution of traffic in the system. The results point to the need for Japan to carefully assess the costs and benefits of its role as Asia's dominant transpacific gateway.