Singapore Changi Business Park: A Case Study of Agglomeration Economies

Pak Hei Cyrus Chung (ID: 1392927)

A Case Study of Agglomeration Economies Singapore Changi Business Park

ABPL90246 The Economies of Cities and Regions

Pak Hei Cyrus Chung (ID: 1392927)

Assessment 1

Pak Hei Cyrus Chung (ID: 1392927)

Assessment 1

Table of Contents ABBREVIATIONS .............................................................................. 1 A. BRIEF ........................................................................................... 2 B. HISTORIC DEVELOPMENT OF CHANGI BUSINESS PARK .............. 2 I.

Changi Business Park Establishment ...................................................................... 2

II.

Singapore Changi Airport ...................................................................................... 2

IV.

Singapore Expo ........................................................................................................ 3

V.

Singapore University of Technology and Design................................................. 3

C. DRIVING FORCE ......................................................................... 4 I.

Government Planning:............................................................................................ 4

II.

Market Force ............................................................................................................ 5

D. SPATIAL PATTERNS ...................................................................... 6 I.

Intra-urban spatial pattern ..................................................................................... 6

II.

Sectional links and inter-sectoral links between firms ......................................... 8

E. IMPACTS .................................................................................... 10 I.

Changi Region and Changi City: Leveraging Aerotropolis Concept ........... 10

II.

Impact on Population in the planning area and Employment ...................... 12

APPENDIX ...................................................................................... 14 REFERENCES .................................................................................. 15

Pak Hei Cyrus Chung (ID: 1392927)

Abbreviations CBD

Central Business District

CBP

Changi Business Park

JTC

Jurong Town Corporations

LTA

Land Transport Authority

MRT

Mass Rapid Transport

URA

Urban Renewal Authority

SUTD

Singapore University of Technology and Design

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Pak Hei Cyrus Chung (ID: 1392927)

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A. Brief Singapore Changi Business Park (CBP) is located in East of Singapore. Also known as the “CBD of the East”, the business park is built for hightechnologies business, data/ software corporations, financial corporations and other knowledge intensive corporations. Notable well known multinational corporations include IBM, Honeywell, Schneider Electric, Dell, DBS, Citi, JP Morgan and Credit Suisse. The business park is located near to Changi Airport, the Aviation Distri-Zone, Singapore Expo and Singapore University of Technology and Design, offering a global connectivity and pool of talents. The business park is also widely accessible by public transport with 2 MRT lines and a bus terminal serving the area. Apart from multinational corporations, shopping malls and hotel can also be found in the business park, providing both work and leisure opportunities. (Clark & Moonen, 2016)

B. Historic development of Changi Business Park I.

Changi Business Park Establishment

Changi Business Park is established by JTC Corporation in 1997, a lead government agency responsible for the development of industrial infrastructure. CBP is Singapore’s second business park, it is a $1.5 billion project with 66-hectare land, taking advantage of the proximity to the Changi Airport. CBP targets to offer landscaped facilities and amenities to high value-added industries and activities (Chen, 1992).

II.

Singapore Changi Airport

Since Changi Airport started operation in 1981, the Changi region has been developed progressively. Anchored by Changi Airport, the region has been developing into an aerotropolis which the infrastructure, land use and business activities has been carefully planned to create a metropolitan area.

III.

Transport and Accessibility 1. Mass Rapid Transit (MRT)

CBP can be assessed by the Expo MRT station, the station is part of the EastWest Line and the Downtown Line. The Expo station is opened in 2001

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Pak Hei Cyrus Chung (ID: 1392927)

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(Changi airport station opened in 2002), as part of the Changi airport line extension in the East-West Line (Tan, 1996). In 2017, the Downtown line State 3 was opened and extended to Expo station. (LTA, 2017) 2. A new bus terminal at CBP began operation in 2015 Bus service 47 and 118 providing bus network to CBP (LTA, 2015) 3. Free shuttle bus services between CBP and Changi Airport IV.

Singapore Expo

The Singapore Expo was opened in 1999 by the Singapore Government, it is the largest convention and exhibition center in Singapore, 10 halls and 32 meeting rooms. Business and cosumer events of any size can be easily accommodated.

V.

Singapore University of Technology and Design

Singapore University of Technology and Design (SUTD) was established as Singapore’s 4th public university in 2009, its permanent campus was founded next to Changi Business Park in 2015. STUD is a research intensive university with a focus in engineering systems and design, information systems technology and design. The SUTD-JTC infrastructure Innovation Center (SUTDJTC I³) was also established to create industrial infrastructure research ecosystem.

Diagram (a) – Infrastructure Development Timeline around CBP

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C. Driving Force I.

Government Planning:

Airport Centric Economic Development Due to rapid growth of air traffic in the 60s and 70s, the Singapore government has decided to relocate Singapore International Airport to Changi. Together with government investment in the MRT system have significantly impact the spatial structure of the city, delivering employment to not only the CBD but also in outlying areas (Phang S, 2003). It is an essential catalyst to help spread demand across a metropolitan area, providing seamless connectivity to other business districts (Clark & Moonen, 2016).

CBP is a government led project and strategically located near Changi Airport, along the MRT East-West line .

The Singapore Expo was also established by government 2 years after the launch of CBP, providing another anchor for exhibitions and conferences. Infrastructure investment by the government has showed a direct impact of creating business activities and opportunities in the area.

Diagram (b) – MRT map and location of CBP Note. Copyright by URA

Land use and masterplan The URA has also defined the land use guidelines for business parks. 60% of the area must be used for essential activities such as high technology manufacturing, laboratories, R&D, etc. (Ang, 1992) This promoted agglomeration of technology and engineering firms cluster in CBP. Investors can lease land sites from JCT to construct their own facilities that suits their needs. The Changi Region is also part of the URA’s master plan for Singapore. The plan is to create a new Changi City leveraging the proximity of Changi Airport, CBP and SUTD. This will be further discussed in the Impact of the agglomeration.

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Pak Hei Cyrus Chung (ID: 1392927)

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Diagram (c) - URA Land Use Master Plan Note. Copyright by URA

II.

Market Force

Dense clustering is important to optimize agglomeration effects, driving firms to take benefits (Clark & Moonen, 2016). The recognized advantages of CBP include lowered land cost, offering a lower rent than the CBD. For example in 2002, CBP rent was reduced by 3-5% (“Low-cost land”, 2002) and in 2007, Citi group move from the CBD to CBP due to soaring rent. (“Citi in @200m”, 2007) CBP also offers specialization with close link to university ie. SUTD and R&D facilities. For example, SUTD can provide talents and a labour pool for innovation; labs such as SMARTLab, OpenLab take advantage of this.

With Changi Airport, Singapore Expo and the Aviation Distri-Zone in close proximity. Firms can take benefits of the global logistic connectivity at a lowered cost and shorter time. For multinational corporations, they can take benefits from the international business gateway and global reach of the region.

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Pak Hei Cyrus Chung (ID: 1392927)

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D. Spatial Patterns I.

Intra-urban spatial pattern

Diagram (d) – A polycentric business activity area forming around the Changi Region

From diagram (d), we can see the clustering of CBP, Singapore Expo, SUTD, Changi South Industrial Estate and Changi Airport in the Changi Region. It is also noted that the cluster is decentralised away from the CBD. An intraurban polycentric spatial structure can be observed. According to Acheampong (2020), intra-urban polycentric spatial structure can be displayed as a clustering of population or employment within a metropolitan.

The linkage of the polycentricity requires transport network. In the case of CBP, well planned MRT system, bus network and Expressways network are the key enabler. The transport network supporting activities at CBP, Expo, SUTD and the industrial estates. The investment to build these transportation network is based on the establishment of Changi Airport. It can be observed that the cluster in between the CBD and Changi Airport.

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Pak Hei Cyrus Chung (ID: 1392927)

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Diagram (e) – CBP and Surrounding Establishments/ Infrastructure

Diagram (e) showed the establishments and infrastructures created in the area surrounding CBP. From transport infrastructure perspective, the MRT Expo station (Downtown and East-West Line), CBP Bus Terminal, Pan Island Expressway and East Coast Parkway are serving the area. CBP, Expo and SUTD are in close proximity so that they can share and maximise the use of these transport network. Changi Airport is the center for this spatial pattern.

The transport infrastructures are originally invested to serve the airport, clustering effect of CBP, Expo and SUTD take benefits of the transport network and agglomeration in the area. Changi Airport enable the global gateway and allow firms in CBP to have easy and accessible to international reach.

Expo also made conference and exhibition venue readily available, benefiting technology firms and financial firms in CBP. SUTD on the other hand, provide the talents for innovation and act as an exchange platform for academia and businesses.

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Pak Hei Cyrus Chung (ID: 1392927)

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Diagram (f) – Agglomeration of Technology and Financial Service Firms in CBP

II.

Sectional links and inter-sectoral links between firms

Sectional Links between firms

A closer look into CBP, it can be observed that there are mainly 2 types of firms located in CBP – Technology related and financial services. Studies of agglomeration have found out that technology or knowledge based cluster in a smaller area and more tightly packed than other kinds of agglomeration such as manufacturing (Clark & Moonen, 2016). It is also suggested that political, social, institutional and other non economic factors play an important role in sustaining the cluster of technology firms, not just knowledge spillovers (Saxenian, 1994).

For financial service firms, they cluster due to the importance to maintain personal contact and face to face interactions, in order to build trust and cooperation. It is also found out the financial firms clustering grow faster and therefore attract other new firms entry (Taylor et al., 2003).

Inter-sectoral links between firms From CBP context, the significance of inter-sectoral links between technology firms and financial service firms should be highlighted. It is noted that there are a cluster of h

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Pak Hei Cyrus Chung (ID: 1392927)

technology innovation firms and R&D labs in CBP. Since

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Table 1 – List of businesses in CBP by industry types

innovative firms and R&D labs

Notable Businesses in CBP

Type of Industries

require fundings and

AMD

Technologies

investments for their projects.

Cisco

Technologies

Loans and investments require

Cognizant

Technologies

financial services firms to

IBM

Technologies

support, it has been found out

Huawei

Technologies

that more banks are physically

Dell

Technologies

Wipro

Technologies

Honeywell

Engineering and Technologies

Schneider Electric

Engineering and Technologies

risk to the innovative projects (Li

FedEx

Logistic

& Zhang, 2023).

Bank of Tokyo

Financial Services

Citi Bank

Financial Services

Credit Suisse

Financial Services

financial situation such as risks

DBS Bank

Financial Services

and potential development.

JP Morgan

Financial Services

Also as mentioned in previous

Standard Chartered Bank

Financial Services

Changi City Point

Retail and Entertainment

located around innovative firms as increasing number of banks can foster a lenient regulation of the banking industry, motivate banks to take more

CBP allows banks to easily assess a technology firm’s

section, face to face interaction is important to

financial firms. In CBP due to agglomeration, financial firms can easily maintain their relationships with technology firms. Proximity also allows banks to direct access on firms facilities and their projects in order to better understand the business nature of the innovative firms, facilitating a better trust and information exchange. Innovative firms can also find trade partners and supply chain partners in the agglomeration district (Li & Zhang, 2023).

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Pak Hei Cyrus Chung (ID: 1392927)

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E. Impacts I.

Changi Region and Changi City: Leveraging Aerotropolis Concept

Freestone and Baker (2011) summarized Aerotropolis as a “time-sensitive scatter of aviation-oriented land uses across airport-centered metropolitan area driven by the private market”. Airport driven development and planning leads to a new metropolitan form organized surrounding the airport. Through time and infrastructure investment, airport area planning model changed from a business district model to a mixed use centers with non-aeronautical development to a polycentric urban form of economic development. To achieve this, airport planning, urban planning and business site planning have to be coordinated.

The Changi region can reflect this development direction. Changi airport as

Diagram (g) – Changi City to leverage current agglomeration in CBP

a

Note. Copyright by URA

major international hub airport acting as a catalyst for both global visitors, market and economic activity, as well as logistic to support non-aviation activities. The emerge of CBP, Expo and SUTD acts as an anchor and agglomeration have formed for future development. This agglomeration required careful land use planning in the surrounding area of Changi Airport.

Together with investment of transport network infrastructure including the MRT

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Pak Hei Cyrus Chung (ID: 1392927)

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system and the Highway network in the area formed the base infrastructure for building a future aerotropolis in the Changi Region.

The URA has played a more direct role in development in order to coordinate with public agencies, rather than just control land use planning and land sale management. Careful district planning is critical to support an organic growth that is catalysed by public sector interventions (Clark & Moonen, 2016). The agglomeration of firms in CBP, the Expo and SUTD are important catalyst of a new district development.

The URA has drafted a masterplan for the Changi Region in 2019. The CBP is an anchor to the future development of “Changi City”. The plan is to create a live-work-play-learn ecosystem around the airport by connecting existing developments and infrastructures in the area. Leveraging the CBP and SUTD to create an innovative ecosystem to attract businesses and institutions. The Changi Regions has already generated the clusters of both aviation and nonaviation activities including high

Diagram (h) – URA Changi Region Master Plan 2019

technology, financial, education, conference and exhibition and retail activities.

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Note. Copyright by URA

Pak Hei Cyrus Chung (ID: 1392927)

II.

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Impact on Population in the planning area and Employment

Population in the planning area CBP is located at the Tampines planning area. According to URA It is the second largest populous planning area in Singapore, it has 200,000 m² of office space and 112,000 m² of retail space. A quick comparison of population between 2010 and 2022 see a 1.3% population growth and remained as the top 5 planning areas with more than 250,000 residents. It is also noted that planning area Bedok, which is just next to Tampines has been the most populated area. These 2 planning areas has significant residential communities accounts for more than half a million people, which is able to provide qualified labour for the Changi Region.

Diagram (i) – Top 10 Planning Areas by Size of Resident Population in 2010

Diagram (j) – Total Population in Tampine Planning Area Note. Copyright by Department of Singapore Statistic

Note. Copyright by Department of Singapore Statistic

Diagram (k) – Resident Population by Planning Area. June 2022

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Note. Copyright by Department of Singapore Statistic

Pak Hei Cyrus Chung (ID: 1392927)

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Employed Residents In 2020, Tampine, the planning area which CBP is located is of the top 5 planning area of work force. Both Tampines and Changi combined have more than 100,000 residents in workplace showed that the area has strong business activities. In fact, it has the second highest number of employed residents by planning area of workplace after the CBD, showing that a decentralised business district has beginning to be emerged in the Tampine/ Changi area.

Diagram (l) – Top 10 Planning Areas of Workplace by number of Employed Residents Aged 15 Years and Over, 2020 Note. Copyright by Department of Singapore Statistic

Diagram (m) – Employed Residents Aged 15 Years and Over by Planning Area of Workplace, 2020

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Note. Copyright by Department of Singapore Statistic

Pak Hei Cyrus Chung (ID: 1392927)

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Appendix

Appendix (a) – URA Draft Master Plan 2019 Note. Copyright by URA

Appendix (b) – Connectivity Plan of the Changi Region Note. Copyright by URA

Appendix (c) – Recreation & Identify Plan of the Changi Region Note. Copyright by URA Appendix (a) – URA Draft Master Plan 2019 Note. Copyright by URA

(2098 Words)

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