Published March 27, 2009

Tighter checks, please: SM to Chinese

By CHEW XIANG IN GUANGZHOU, CHINA

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THE Chinese authorities should maintain 'stringent supervision' over their companies that list in Singapore, Senior Minister Goh Chok Tong said yesterday.

A piece of history: Mr Goh and Shenzhen mayor Xu Zongheng in front of the statue of Deng Xiaoping, who pushed forward China's reform 30 years ago

Mr Goh said that he had suggested to officials in Guangdong province that they could work with the Singapore Stock Exchange to 'ensure they have stringent supervision of their companies listed overseas'.

He was speaking to reporters in Shenzhen, where he is on the final leg of a five-day official visit to Guangdong, accompanied by senior ministers of state Grace Fu and Lui Tuck Yew, as well as a business delegation.

'It's a way of helping them brand themselves,' he said. 'If they allow a small percentage of these companies to defraud the investors, that's going to spoil the reputation of other Chinese companies, good companies, listed in Singapore.'

Mr Goh, who is also chairman of the Monetary Authority of Singapore, the de-facto central bank and financial market regulator, said that on their part, Singapore regulators face a tricky balancing act.

'If we tighten (regulations) too much, we can lose some of these companies from being listed every year,' he said. 'If we don't tighten, then we have other problems. These are matters which MAS will look into together with the (Singapore Exchange) - how to find the right balance.'

His comments come in the wake of a number of scandals that have hit Chinese listings, or S-chips, since late last year. Fibrechem Technologies, China Sun Bio-Chem and Oriental Century are suspended from trading over alleged accounting irregularities. Oriential Century's chairman Wang Yuean admitted to inflating sales and cash balances, while China Printing & Dyeing's husband and wife management team absconded after the parent company defaulted on its debts.

There are more than 100 Chinese companies listed in Singapore, and at least 25 of them are from Guangdong, one of China's richest provinces and a major manufacturing hub that has nonetheless, borne the brunt of the economic slowdown as exports have slumped amid depressed demand from developed countries.

Mr Goh said that after speaking to senior government officials in Guangzhou, Foshan and Shenzhen, he was reassured that their economic problems are not as bad as feared.

'I heard that Shenzhen was badly affected, I was wrong. Some 900 companies have closed down (in 2008), that's a large number. But Shenzhen is expecting 10 per cent growth this year,' he said.

He noted that the export-driven Guangdong economy faces similar problems as Singapore, and, like Singapore, is aggressively restructuring into higher value-added industries.

'There are companies which are struggling in the recession,' he said. 'You know it's only a matter of time before they go. Let's move ahead. Don't waste time. Upgrade. That's what we're going to do. Then separately, we take care of the people who will be unemployed.'

Mr Goh said that he 'doesn't know' when the economy will turn, but in the meantime, the government will press on with restructuring. One way to move ahead is to upgrade its workers and 'build new capabilities', he said, pointing out that Keppel Corp plans a 'knowledge city' on a 50 sq km site North-east of Guangzhou.

'We can use that expertise to build more cities in other parts of China, in the Middle-East, then of course when we go out, we bring along Singapore expertise and Singapore workers,' he said.

The key, when venturing overseas, is getting either tangible or intangible benefits for Singapore, Mr Goh said. 'How to find that formula is not so easy. The (Suzhou Industrial Park) we helped them, they succeeded. Yes, they've not lost money but neither have they made money over there.

'For Singapore the intangibles were political (gains), and also our track record and our reputation, which enables us to move into (the Tianjin eco-city project), which helps us to move into 'Knowledge City' without government (leading the way). So already we're seeing results.'