Last year Qatar launched its first national leadership centre to strengthen the leadership capacity of its current and upcoming leaders. The programme provides a vehicle to share and challenge ideas and build on existing leadership competencies. As part of the programme, the participants visited both the world’s factory, China, and the brain of the east, Singapore.
China, the giant and yet agile economic apparatus, constitutes of various and diverse socioeconomic clusters and provides large laboratories to examine products, services, ideas and policies. China, the model of a socialist market economy, has deep pockets and an abundance of low-cost human capital that has made its growth success possible. Singapore, on the other hand, is a tiny sophisticated capitalist city state with robust regulations and transparency allowing it to attract $618.6 billion (Dh2.27 trillion) worth of foreign direct investment (FDI). Singapore has established itself as a host for multinational companies that target the region.
The visit was limited to three clusters in China one of which was Ordos in Inner-Magnolia. The most striking facet was the tremendous construction in this region. This is similar to many parts of China which use the same economic model of ‘build it and they will come’ or ‘supply creates its own demand.’ It is even called the Dubai of Northern China because of its urban centre the ‘Kangbashi New Area’. Nevertheless, the purpose of building this city is different as it comes as part of China’s pursuit to diversify their economy through shifting their compass domestically, altering the demographics through urbanising and raising the proportion of middle class to increase the consumption, creating better paid jobs and attracting FDI.
The coal and gas rich Ordos historically was part of the once largest contiguous empire in the history, the Mongol Empire. Today, the soul of the great Genghis Khan is witnessing the famous two colossal stallions in the midst of unsold and unlet flats, shops and office spaces. The continued infrastructure development policy has led Ordos to become the largest ghost town in China, with over $5 billion of unused public buildings. It is the result of failed policies which is resulting in the burst of the housing bubble. This is mainly due to the failure of mobilising people to the city despite having the highest gross domestic product per capita in China, according to the local authorities.
Time will tell if in the long term they can turn their vision into a reality and that the unoccupied infrastructure will help drive the Chinese economy or result in a crisis which will be greater than the Asian crisis of the 1990s.
For members of the visiting team, the parallels were thought-provoking, almost all of us could see the huge parallels with the Gulf region. The emphasis on infrastructure building is eerily similar and the obvious conclusion would be that too much build could lead to similar mistakes. Dubai and the recent financial crisis should have been a wake-up call.
Questions have been raised by the participants about why Singapore made it but not Ordos, why Qatar is investing in domestic infrastructure projects and housing and mixed-use developments and how these developments can help diversify the hydrocarbon based economy.
Dr Omar Al Shehabi, the director of the Gulf Centre for Development Policies in Kuwait, raised similar questions in his recent book about these projects in the Gulf. Dr. Al Shehabi tackled the issue from a different angle as he perceives these projects as a threat to the demographics of the region and hence a threat to the identity of the individuals and their role in their countries. While this is a valid argument due to linking the purchase of real estate in the region with the residency permit, but it should not be the only part of the story.
Singapore, the first leg of our journey, helped us better understand the best course of our future. Singapore has successfully assimilated different ethnicities and despite being a tiny state has achieved impressive growth. It also boasts some of the highest standards of living in the world. It has done this by encouraging regulation, transparency and a cohesive society where everyone has a stake in the country’s success.
The lesson which leaders, policymakers and investors can learn from both Ordos and Singapore is ‘even if you built it, they might never come.’ The red bricks and asphalt are only one element of the success of Singapore. What pulled it all together is the business proposition that Singapore offered to its people first and to the rest of the world. It is not only “a great city to live, work and play in,” it is also a regional hub with transparency, rule of law, sound regulations, established capital market, a world class financial centre and a host for skilled human capital and headquarters of multinational companies.
In light of the absence of the right business proposition and its own recipe of success, the aforementioned peril of identity will be compounded with an economic threat due to the risk of swamping the market with superfluous units which will lead to the emergence of ghost cities on the coast of the Arabian Gulf. The Ordos syndrome can be mitigated by a process of creating a business friendly ecosystem, becoming the region’s Singapore in the right perspective and finally preserving the national identity.
— Hassan A. Al Ibrahim is a Qatar current affairs commentator and the Co-Founder of FIKRA Consulting and Research, a Qatari Think/Do Tank. You can follow him on Twitter at www.twitter.com/halibrahim
