Singapore’s Ascendas has more plans for India, while mulling the uncertainty in our regulations.
In China’s booming real estate sector, a Singaporean business space solution provider is leveraging skills and models perfected in India to serve the world’s second-largest economy’s fledgling services sector.
For Ascendas, which counts itself among Asia’s leading providers of business space, it isn’t a one-way street. The company that made an entry into the subcontinent with the landmark International Tech Park, Bangalore, in 1998, is also well positioned to transfer some of its experiences from China to the Indian market.
“I think we are in a very good position to allow that cross-fertilisation of ideas, as well as of companies. For example, our IT (information technology) Park in Dalian is now home to TCS (Tata Consultancy Services); Wipro is also in our park in China. In India, companies like Huawei Technology from China are tenants in our park. So, we are able to also bring Indian companies to China and Chinese companies to India, besides bringing our development models into the respective countries,” President and CEO Chong Siak Ching told Business Standard.
India and China are two of the largest markets for Ascendas, apart from its home territory of Singapore. While much of its projects in India have been heavily concentrated towards the IT sector, its portfolio in China is much wider, including industrial and built-to-order space, as well as office and commercial developments.
INDIA: PLAN AND ISSUES
The situation in India, however, may be changing. “We are planning an industrial township in Chennai, Tamil Nadu, where we will be providing manufacturing facilities, logistics facilities, besides IT facilities, and also supporting amenities like residential, retail and commercial. So, it will be an integrated community, with all the conveniences on the site,” said Chong.
Ascendas and a Japanese consortium, including Mizuho Corporate Bank and engineering firm JGC Corporation, is looking to develop an integrated township in Chennai, with eco-friendly infrastructure for industrial, business, commercial, residential and lifestyle amenities. And, although Ascendas’ IT Parks in India typically have a range of supporting amenities such as business centres, residential or retail facilities, the proposed Chennai development is unusual in its offering for the manufacturing sector.
“From the integrated community concept, that is not new, but in terms of introducing large-scale manufacturing facilities, you could say that could be new,” explained Chong.
“Though, when Bangalore first started up, we also provided space for manufacturing. But, as you know at that time, manufacturing did not take off in India in as big a way as IT,” she added.
HURDLES
India may be a crucial part of Ascendas’ Asian presence, but its regulatory environment continues to be a challenge. The proposed Direct Taxes Code is a case in point, said Chong, with changes expected in the minimum alternative tax structure.
“We don’t have any argument with the concept of a direct tax code because it simplifies all the various taxes, but we believe what the government should not do is to make some of these applications retrospective. You can start as of today for new parks that are being approved or planned, but not for parks that have been already approved and for which companies have already invested money,” she explained. “These are things that businesses do not like because businesses must plan with some certainty, particularly when these rules have a financial impact on their projects.”
Despite these issues, Ascendas remains bullish about India. Over the past 10-15 years, it has invested close to $2 billion (Rs 9,000 crore) in the country, growing its business in the subcontinent into the largest outside of Singapore.
“I think India, growing at a rate of seven-eight per cent, will continue to have strong demand for quality real estate, particularly business space, which is what our core business is. We have the Ascendas India Trust, we have got several private funds for development in India, and so we will see that we will continue to allocate capital to India,” said Chong.
Launched in 2007, the Ascendas India Trust was Asia’s first listed Indian property trust, seeded by four world-class IT parks, and one in the range of private and listed real estate funds managed by the firm to allow investors to tap into high-growth Asian economies.
“But most important, the rules and regulations must continue to be investor and business friendly,” Chong added.
