Does Singapore exploit Batam?

Singapore has a highly developed economy. It is the world’s wealthiest nation by GDP per capita. As a leader in economic growth in the region, it will also lead in terms of how others model their policies regarding governance and economy. It therefore seems worthwhile to contemplate Singapore’s role in labour restructuring the region.

In a recent seminar I attended, the Singapore-Johor-Riau Growth triangle was mentioned in the session as the economic aspect of studies on the Sijori region. The growth triangle was characterised as the development of a ‘complementary relationship’ between Singapore, Malaysia and Indonesia, where there are mutual benefits. However, I wondered if there were indeed mutual benefits, or if one country has significant power and advantage over the others. If so, it would suggest a relationship of exploitation rather than mutual benefit.

According to Steve Graham and Simon Marvin in their book Splintering Urbanism (2001), “…the Singapore government is explicitly using targetted infrastructure investment to construct a manufacturing growth region around it in the adjacent parts of Malaysia and Indonesia, to create a transborder urban region with a sophisticated division of labour.” As such, it might be argued that it was the Singapore government who initiated and propelled the formation and development of the Sijori economic region.

The ‘sophisticated division of labour’ refers to the division of labour such that Singapore holds the skilled labour, including technical and managerial resources, while Johor has semi-skilled labour and land, and Batam has the low-cost labour and land. Surely, it seems that whoever has the skilled labour also has power in the sense of having technology and knowledge. This would confer certain benefits in terms of working conditions and salaries to Singapore.

In entering this economic agreement, it then seems that the group with the low-cost labour and land is at a disadvantage- it is unable to negotiate for better wages and it becomes dependent, both psychologically and materially, as it gives up its domestic production for this type of work, to sell its labour in order to survive. Singapore on the other hand, enters into the economic relationship in order to profit more, as opposed to merely surviving. So the terms under which each of these groups come into the relationship and contract is unequal right from the beginning.

Johor and even more clearly Batam, are essentially places to outsource work. Multinational corporations (MNCs), which account for at least 20% of world production and 70% of world trade, now organise their production on a global basis. From the perspective of the MNC, the Singapore-Malaysia-Indonesia Growth triangle is an excellent opportunity to capitalise on the knowledge intensive operations in Singapore, and the labour-intensive operations in Johor or Batam.

From an alternative perspective, the forces of globalisation put developing countries like Indonesia at a disadvantage. The main point is that MNCs exploit local labour and resources as they pay lower prices and lower taxes than they otherwise would have to pay while obtaining high profits that they repatriate to their home countries; they do not use to regenerate the economies of the developing country. My largest concern is therefore, whether or not Singapore as such is effectively exploiting Batam, and if so, whether this is just.

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1 Comment

  1. it’s just like malaysia’s iskandar development region in southern johor which has industries that are exactly the same as in S’pore. iskandar region is directly competing against S’pore.

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