Question and answer session

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Question: Mr Chairman, I am from the Census and Statistics Department of Hong Kong. The advanced development of information technology certainly has an impact on cross-boundary or cross-border co-operation. It also imparts new opportunities. I would like to know, from the IMS Experience, apart from co-operation in industrial development and so on – you set up factories in another region and so on – what is your experience in co-operation in the high-tech information technology? Because in Hong Kong nowadays we have banks setting up their data processing centres across the boundary over in the Mainland. So is this kind of thing happening in Singapore with its neighbours, and what is the effect on the economy?
Chairman: I think, if I get that question right, it’s the prospect of high-tech co-operation with particular reference to Singapore. I think, maybe, we can collect a few question first, so that we can direct the questions to different speakers. Any more questions?
Question (Professor Peter Cheung, HKU): I would like to ask two broad questions. The first question concerns legal issues. I would like to know how do the different countries deal with the legal differences or the differences in the legal systems in promoting cross-border co-operation?
And secondly, it seems to me that the discussion has focused more on the administrative, economic dimensions, and how about society? How did the different countries or governments help society to build up the consensus on promoting cross-boundary co-operation?
Chairman: I think this question is applicable to all the three speakers, and even Professor Woo can also comment on it. It is building societal consensus. Is there any way cross-border co-operation will be conducive? I think, in this direction. Any more questions?
Question (Mr George Yuen, The Better HK Foundation: Can you comment on the cultural affinity vis a vis income disparity between the two different regions if they have to force a cross-border co-operation?
Chairman: I think this question will be particularly relevant to the Asian case. The Mexican and American Border, I think, will be highly sensitive to this question of income disparity and I don’t know how is the situation in the other zone but we’ll leave that to the speakers later. All right, we have three, maybe we can -- Yes, we have one more and then we can have a go.
Question (Joseph Li, Central Policy Unit): When two countries come into co-operation, two cultures will also come together intimately and interact. In your experience are there serious cultural conflicts, and if so, how do you handle them?
Chairman: I think we have quite a few questions and maybe we’ll clear the decks first, as it were, and I would like, maybe, to call upon Professor Chia from Singapore first, and then we’ll call on the other countries’ speakers.
Professor Chia Siow-yue: The first question regarding IT co-operation. There is a lot of bilateral co-operation, for example, between the two police forces, between the two immigration authorities, so in that sense there is some IT co-operation. But the IT co-operation in the growth triangle is now seen in the broader ASEAN context. ASEAN has agreed to have a formal

E-Commerce co-operation. So under the E-Commerce Agreement there is a lot of interaction among the ASEAN businesses.

Legal differences in cross-border and how to build societal consensus, I think in the case of the IMS growth triangle there has not been a problem because traditionally, in the case of Singapore-Johore, there has been a lot of not just political but economic and social interaction. And also, in the broader ASEAN context, there are now efforts to build what is called an ASEAN community. So the community spirit is getting stronger.
And this ties in with the third question about cultural affinity and income disparity. Now, in the case of income disparity it is obviously very wide between Singapore on the one hand and Johore and the Riau Islands on the other. But it has not become a social issue because both the people in the Johore and the people in Riau are fully aware that there is no way you can have income redistribution because we are different nation states. But, in fact, through linking with Singapore, Riau is improving its economic level; and linking with Singapore, Johore has improved very dramatically. So I think the people are fairly aware about it.
In terms of cultural affinity, here the differences are much greater than between Hong Kong and the Pearl River Delta but the differences are not that acute because Singapore is a multi-cultural, multi-ethnic, multi-religious society. Johore is primarily a Muslim state, Riau is primarily a Muslim state, but Singapore has also a sizeable Muslim community, so we are used to interacting with Muslim states in that sense. So the cultural part has not arisen at all.
Another question: How the two cultures interact, whether there are conflicts. As I say, the interstate or growth triangle relations between Singapore and Johore, and Singapore and Riau, is reflected in Singapore’s own ethnic resolution. Both in terms of government policy, in terms of community level interaction, individual interaction, we are always very conscious of the fact that we are living in a multi-cultural, multi-religious society, and therefore we are always sensitive to the feelings of the other ethnic and religious groups.
Chairman: Can I at this point maybe invite Dr Nathanson to react to the questions. Whatever you’d like to respond to.
Dr. Charles E. Nathanson: Let me start out with the question about societal consensus on cross-border co-operation because it is a large potential issue and past issue in the San Diego-Baja California region because the societies are so different. Let me say, I don’t know whether it’s true in the other regions, it might be an interesting guess that it is, but the impulse to pursue a cross-border regional strategy and the imagination being fired by it, is largely an elite imagination, not a popular imagination.
People who see the business of larger economic development opportunities, the civic energy, this is not a grassroots organization. In fact a grassroots movement - I think in San Diego anyway, and I think also in Tijuana - grass-roots organizations tend to see this taking energy and resources and the tension away from themselves. Consequently, a lot of this goes on off the radar screen of the population as a whole, until something comes to enough fruition, perhaps, where they are going to have to pay for it or face the consequences of it.
That, I think, is the case in this joint water aqueduct that we are talking about. It was also the case when the bi-national airport came to a focus. And there were lots of xenophobic fears about this as there are about water being transported. This was an aqueduct that would be built on Mexican land with Mexican labour but at US interest rates. It would be, financially, a very good deal for the region but it would be something that its populace might be upset about - seeing their water supply come through another area. And the same thing was true about an airport, there were all sorts of security reasons.
I don’t think we faced, adequately, the question of consensus. We’ve tried to break down stereotypes - the impression that Tijuana is poor and just generates problems for San Diego is something that gets in the way of people thinking positively about the idea of an association to begin with - and we have tried to deal a little bit with that but it is a large problem.
Let me just have a final rundown of the list of all the questions. I might have something to say about them. I turn it over to my fellow panelists.
Answer (Mr Birger Olofsson): If I could comment on the consensus issue. From our point of view in the Oresund region, I think it is a necessity. And as I said, the whole integration process in the Oresund region has been driven by political visions, by huge infrastructural investments, and also by the Oresund Committee and the EU funding, which I talked about. And as I also said, we have the highest population density in all Scandinavia in the Oresund region and if we fail, if we can’t compete in the European and the global arena, it will hurt both Sweden and Denmark, so there is a big interest from our two governments to really give support to the merger in the Oresund region.
And now when the business sector and the population and the universities and so forth respond to those political visions, it is quite interesting to see that they have become very demanding and they are putting pressure on the politicians to harmonize and to give equal conditions for both collaboration and competition in the region. Of course, we will not get that far, meaning that we will have our own laws and legislation concerning taxation and social security systems and value added taxes and so on. But what we will achieve, I think, is some sort of treaty regarding that region in a geographical sense, meaning that people who work on one side and live on one side they have a special treaty for those people. And perhaps also that we will agree upon joint funds for redistributing taxation money across the border. Such things are being discussed and that is quite interesting.
If I should comment also on the cultural issue. Some people say that we have a language problem between Sweden and Denmark. I don’t think so. I consider it to be two dialects but it is the same language. For instance, if a Dane and a Swede meet in New York, they will start to hug each other and say how wonderful to see you, you are in my family and we are Scandinavians. But it is always like that, the closer you get to each other, the more you discover the differences. And there are some cultural differences in our behavior, in the way our authorities work, in the way our companies are run and so forth, but they are not that big. From a global point of view, they are very, very small. And if there are those differences, I think that will stimulate the development because when you have different ways of doing things you find new ways of doing them. And some people say, and these are highly respected people and they are working and studying people’s culture and behavior, and they have discovered that we do our washing-up in two different ways in Sweden and Denmark, and they say that this is a great obstacle for the integration process. I’m not sure about that. So it depends on what perspective you have but I think it is quite an easy one.
Answer (Professor Wu Chung-tong): If I might comment on the issue about possible conflicts and how do you go about promoting cross-border collaboration. I think sometimes conflicts are inevitable, but knowing what they are is the first step, and finding out why they exist is really very important. Sometimes “conflicts” are very subtle. I cited an example earlier of how individuals who look for work, it never enters into their minds they might look for work cross-border. It’s really a cultural issue. The individual is not accepting that there is a cross-border development and it is at that level you need to work on it.
But this is where, I believe, Mr Nathanson mentioned how the roles of NGOs are very important. In diplomatic terms you are using “third track” – trying to break the ice, trying to discuss the issues in the arena where they are not seen as politically charged, not seen as official documentation, not seen as officers of different governments or organizations, making statements that represent official stances.
So you have San Diego Dialogue and in Cascadia you have the Discovery Institute - just as examples. And in the case of the Yellow Sea Sub Region, who are the people actually carrying on the dialogue, the discussion? They are the research institutes of the various countries actually promoting the idea. You can be sure that the governments of these various countries are actually participating in the background but the people carrying on the ideas, pushing the ideas, promoting the ideas in the international forum are actually university and research people. Here is where the Chinese University, the Hong Kong University, etc, in Hong Kong, might have a very interesting and important role to play.
Chairman: I wonder whether there might be more questions. We can go for another shorter second round and then I will do the summing up a little bit later.
Question (Gordon Wu, Chairman Hopewell Holdings): I want to ask the panel this question on cross-border thinking. In Hong Kong we do have some thinking that believes that if you let too many people cross the border too easily there will be too much spending across in Shenzhen; the real estate value will drop. Now, there is no need to do any promoting because last year at the Shenzhen border there was over 100 million people crossing. That is an average of 2 million people a week. So I wonder, in your experience, if you can tell us that this is a valid thinking or invalid thinking?
Chairman: Who would like to take the bite? Dr Nathanson. The two borders are very close, so I think it is appropriate that he would like to have a try at the answer.
Answer (Dr Charles E. Nathanson): There must be more shopkeepers than real estate developers in San Diego because though the same worry is there - in fact there is a worry throughout California about the Mexicanization of California and one of the things that people have in mind is the deterioration of real estate values – but in San Diego there is about $2.8 to $3 billion a year, probably more now, spent by people from Tijuana coming north and shopping. That $3 billion is more than the Convention Centre plus the Super Bowl plus the Republican National Convention plus a lot of other things brought to San Diego. I think it’s three times what all those other events brought to San Diego. They add about a million shopping trips a month to just the South Bay portion of San Diego. Facilitation crossing for those people to spend money in San Diego has always been a popular thing to do because they then go back home, so there is not an obvious connection to real estate values. Were they staying and living you might have more of a problem.
Answer (Mr Olofsson): The Oresund experience, this bridge that we have built, has been in operation now for about 8 months and we built that bridge just to increase mobility over the straits. And we already can see that crossings have increased about 100%, so now we have about 60,000 crossings per day and that has doubled over the last six months. And there are all kinds of activities going on. Of course consumers on both sides of the Oresund, they have discovered that they can have advantages of buying goods on the different sides of the borders and Danes go to the dentists in Sweden, and the Swedes they can have fun in Copenhagen all the night round because there is always a train taking them home. They operate every 20 minutes now between Denmark and Sweden. So we have a saying that ‘bridges create bridges’. We want mobility and right now we are in a political decision-making process to build another fixed link between Denmark and Germany, the so-called Famon-Belt (?) link, and that is also a huge construction.
Answer (Professor Chia Siow-yue): In the case of the Singapore-Johore crossing, every day more than 100,000 people cross the border. Weekdays these commuters are mainly Malaysian workers coming to Singapore to work, and some of them are Malaysian students coming to Singapore schools to study. Weekends there are a lot of shoppers from Singapore to Johore. In the past, the Johoreans came to Singapore to shop because our shopping centres are very modern and have a lot of goods and so on. Now it’s the reverse flow. So you get Malaysians coming down to Singapore, they want to buy branded goods and so on. But Singaporeans crossing to Johore to go to the supermarkets and they buy all the daily necessities, the cheaper drugs and so on. So as a result of which, now who is happy? The Johore retail businesses are very happy because they get a lot of custom from Singapore. The Singapore retail sector is very unhappy because they see very depressed conditions. And I think the same thing prevails between Hong Kong and Shenzhen.
In the case of real estate, with the booming Johore economy the price of real estate goes up and because houses there are much cheaper we also have the case of Singaporeans buying a second house in Johore as an investment. But with the 1997 crisis, all the investment in real estate has collapsed, so people don’t buy houses for speculative purposes, so as a result of which the real estate market is very depressed in Johore. But it is also very depressed in Singapore.
There is also a lot of cross-border - Singapore is a very well developed metropolis, so you get Malaysians coming to Singapore for medical services, Indonesians coming to Singapore for medical services, so we have a lot of private hospitals and private clinics in Singapore. They really thrive on Malaysian and Indonesian patients, so to speak.
Then, as I say, many of the Malaysians come to Singapore to work. One-quarter of Singapore’s labour force is foreign and a lot of them are Malaysians. So it is cheaper for them to stay in Johore and commute daily to Singapore and they return to Johore at the end of the day. But as a result of which you get many Malaysian cars driving into Singapore and crowding up Singapore roads, so the Singapore Government has therefore now imposed a levy. Malaysian registered cars that come to Singapore must pay certain taxes which the Singapore motorists have to pay - very high taxes, probably one of the highest in the world.
The other part about the cultural part is, I forgot to mention just now, TV channels. Malaysians in Johore and even far north can receive Singapore channels. Singaporeans can always receive Malaysian channels. And in the case of Indonesia, on Batam Island they can receive Singapore channels. And there has been some resentment sometimes but I don’t think it is serious, that many argue that in Batam the main currency is the Singapore dollar rather than then Indonesian rupiah.
Question (Daniel Kwok, Vocational Training Council): I think I would like to raise one very serious question that would be a dilemma. That is the more open of our cross-border co-operation, especially of Shenzhen, there would be a high danger there would be a threat to our “one country, two systems”. So how can we address this dilemma?
Chairman: Sorry, I don’t understand. Sorry, what is the dilemma?
Question (Daniel Kwok, Vocational Training Council): That means if you open, if we have the borderless co-operation, then how can we maintain the “one country, two systems”?
Answer (Professor Wu Chung-tong): But isn’t there a time limit to the “one country, two systems”? Have I got it wrong?
Question (Daniel Kwok, Vocational Training Council): It is 50 years.
Answer (Professor Wu Chung-tong): Fifty years is not that long you know. No seriously, it’s now 40-odd years, right. I mean obviously, it is beyond my lifetime. But think of it, 50 years is really not that long to think about two systems coming together. It seems to me in any system – and forget about talking about Hong Kong and China for a minute – in any system, in any organization you want change, like I change my faculty, you give them a time limit and you say maybe in X number of years we are going to do this. And this is how we prepare people to do that. So there are things you would like to achieve maybe in X number of years – you start announcing them, you start alerting people to it, sensitizing people to those possibilities. It’s like running a university, it’s not very different.
Dr Charles E. Nathanson: I’d just say, I don’t know any university that changes in less than 50 years.
Professor Wu Chung-tong: Not Australian universities!
Chairman: If I understand the question right, I think he was referring to, if we open up more, and I think sooner rather than later, the dilemma is that the “one country, two systems” will not hold. And I think this is a political question, it is also a political dilemma.. I think all the forces are going for greater integration and integration sooner rather than later. But I think there is the political angle, the political decision that has to be taken, because if you open up completely there is no border. Then I think they will go against the very essence of the “one country, two systems”. And, of course, if you go fast, I think it would really not be to Hong Kong’s benefit.
Now, in the sense that our real estate prices will be even more depressed because I understand that even last year – over lunch I got a figure – out of the new flats, houses, that were constructed and sold in Shenzhen, 11,000 were sold to Hong Kong customers. And this can be compared with about 22,000 or 24,000 units that were sold in Hong Kong. So it’s about 50% of Hong Kong’s property sold in Shenzhen last year. So just think of the impact, the impact is really enormous already.
Let me take this opportunity in the remaining time that we have to make a few statements concluding what we have learned and what cross-border co-operation means to us from various perspectives.
I think, if we take a very narrow sense of the words “cross-border co-operation”, I think it is more or less the way that we have heard. Well, borders are policed, borders you really want to facilitate the flow of people, goods, and perhaps ideas. But actually it goes beyond that in the Singapore model. I think we can look at it in two ways. First, you have a bilateral cross-border and co-operation that goes with it. And this we have seen in the Mexican-American Border in San Diego and Tijuana. And if you are not familiar with this border, because we have not been given a lot of factual background, I just refer you to this Oscar winning movie, ‘Traffic’. If you have seen that movie and seen the people crossing in either direction, that will give you an idea how busy is that border. Because I never got a clue before, although I thought that I knew the cross-border traffic in North America quite well because having crossed between Canada and the US many, many times, but I never got a clue that it could be as busy as that border. And that border is probably the busiest in the world in terms of vehicular traffic.
And this can be compared, perhaps, with the Hong Kong Border, which is Hong Kong-Shenzhen, which is probably the busiest in terms of pedestrian traffic and people getting across through trains. And the increase since 1997 has been at double digits every year, so it has been really going in the direction that our friend has asked that question. The forces of pushing the two sides of the border together, I think are irresistible. I think they are natural, they are irresistible, they have an economic logic behind it. Things are cheaper across the other border. And then people have to come to schools on this side of the border. So I think that that border, we can learn something, I think, in the way that the Hong Kong Border is operating in that sense.
But the Hong Kong Border actually leads to a wider hinterland. Hong Kong Border, in fact, leads to the Pearl River Delta and beyond in Fujian and other places in the coastal area. In fact that jumps to the second part of the cross-border traffic and the meaning of it and that is that cross-border actually can lead to a wider hinterland of development. And this really gets to the major characteristic of Asian development after 1980, and that is the development of the Southern China growth triangle. Now, that triangle came into being gradually but forcefully and with a lot of private enterprise initiative, after the early 1980s, after the Special Economic Zones came into being in 1980. Hong Kong and the Pearl River Delta, again, to be wedded as one.
But it went beyond to Fujian, because Fujian was also open and an area with special policies, and since 1987 when the old soldiers were allowed to return to China to visit families, that began the floodgates of investment of Taiwanese capital into China and much of it was through Hong Kong to Fujian and Guangdong. So you have this very successful model of growth triangle which can be defined as sub-regional economic co-operation. And that still is the most successful sub-regional co-operation by a very wide margin.
The IMS growth triangle, which we heard of earlier, I think is successful in a different sense, because you do not really have a triangular relationship, you have two pair-relationships between Singapore and Johore, and Singapore and Riau Islands. So it is a different kind of relationship. And the magnitude of co-operation, I think, is only a fraction of what it is in the Southern China growth triangle. But whatever it is, this is a model that has been driven by a lot of recent forces of development.
In fact this started in the early 1980s when the post-war era ended. We saw the demise of communism, we saw the demise of the Soviet Union followed by Eastern Europe. And China and Vietnam in Asia, as former communist countries, have also opened and adopted an open policy in 1978 and 1986 respectively. And they have opened up, I think, the atmosphere for development.
So the very border in the contemporary world, although we have heard scholars like Anaichi Omei who wrote a book called ‘The Borderless World’, it is only borderless in a certain sense, that ideas, goods and people can move across borders with unprecedented ease and unprecedented speed. But borders still exist, as we all heard. They are very real. You have to police, you have to regulate, you have to administer, particularly the flow of illegal and undesirable goods, however defined. We saw, for example, the death of 56 illegal Chinese immigrants who, I think, met their untimely death in Dover, and that was only a reflection of the illegal human traffic that is still going on. And this goes on at a very significant profit to some of the operators. And so since 1980, these were the two factors.
But then you also have other factors that make it conducive for cross-border traffic and co-operation and development. You have IT development. Information technology, I think, has made it very easy for people to cross borders. You can monitor what is happening on one side of the border with the other, through telephones, fax and all kinds of easy communications.
You have the promotion of free trade. I think this is now more or less taken as an objective. I think in APEC we go for the 2010 and 2020 solutions. That means by those dates there will not, theoretically, be any free trade barriers. So you do have, I think, in the last 20 years, a very, very different situation which promotes and fosters inter-country co-operation. This can be between two countries, as we heard in the European and North American situation, but you also have three or more countries as we have heard in Asia. Profession Wu gave us a lot of examples and these could be quadrilateral - four or even more countries. The Golden Triangle, for example, in south-east Asia, is an example, but it connotes another meaning but we don’t have to get into that.
So we do have the Mexican and the US Border giving us some lessons that we can really learn from, I think, and these can be compared with the Shenzen Border.
Now, the Oresund Border and the Oresund region, I think we can also learn something direct from that too, because Hong Kong has been thinking of maybe connecting with our counterparts on the other side, on the western side of the Pearl River Estuary, and I am referring to, particularly, Zhuhai. Zhuhai is another Special Economic Zone. But that bridge – it has been talked about – is much longer than 8 kilometres. That bridge is 38 kilometres. I think we have to get the financiers to finance this but when you have an idea, when you have a vision, I think that people will get around to making it a reality.
Now, it will not be very soon but this is still on the books for discussion and when they see that there is a pressing need for the two parts to be connected, I think they will. But the planners have already finalized the plan to connect Hong Kong to Shenzhen, this is the Western Corridor, that will be from Hong Kong to Shekhou, and that will be operational by 2005 and the two administrations will share the cost.
So I think we would like to hear more from you. We wish you luck in you bridge. And I hope we can all be as happy as the Danes are, I think that is a very important vision because there is no point to co-operate if you are not happy. I think that is more or less the bottom line, if you co-operate this is to promote the welfare of citizens concerned, and I think this is something you give us a very good model to work on.
Dr Charles E. Nathanson: I can also make Gordon Wu happier than I did, perhaps, in my comment by saying that Southern California property values are at the highest they have ever been and that border crossings are at the highest they have ever been. So your interlocutors should take a lesson.
Chairman: I think on that happy note I would like you to join me in thanking the speakers. And thank you very much for staying till the very end.

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