I am sure everyone has heard about the relationship Jack Ma has with the Malaysian government. He is the digital adviser to Malaysia’s digital economy and has signed an MoU with the Chinese and Malaysia government to connect e-hubs under the Electronic World Trade Platform. The reason I am writing about is that I have recently read an article by Tech Wire Asia here and Malaysian Digest here on why Ali Baba chose Malaysia over Singapore, and they provided business, geographic and political reasons like:

1. Operational and Labour costs in Singapore are substantially higher compared to Malaysia
2. Malaysia’s population is higher at 30m compared to Singapore at 5m. Bigger market.
3. Malaysia is connected to Thailand via land which connects to Cambodia, Myanmar, Vietnam.
4. Malaysia has a much bigger Chinese population than Singapore
5. Malaysia is a close political ally to China

The reason Jack Ma chose Malaysia in my opinion has more of a political element to it – Singapore and China have bad diplomatic relations currently and historically.

It boils down to these few diplomatic points Singapore and China had in recent times. Please find the article here from the Diplomat for a more concise explanation.

1. Singapore’s military and diplomatic relationship with Taiwan
   Singapore has military arrangements with Taiwan way back from the 1970s, when Lee Kuan Yew forged ties with Chiang Kai Shek under the “Starlight project”. As we know, Chiang Kai Shek and his Kuomintang escaped to Taiwan when they lost to Mao Zedong in the 1940s, and relations were always bitter between them. Although Singapore has always gave official support to the one-China policy, it has still maintained military ties with Taiwan.
2. Claims in South China Sea territory
   It is no secret that China is playing a bigger and bigger part and influence in the South China Sea with its building up of military bases and its claim that the entirety of the South China sea is theirs, is in conflict with Malaysia, Philippines, Brunei, Vietnam and Taiwan.  You can read up on more about it here. Although Singapore is not involved directly in it, it has in numerous occasions supported for international arbitration to the South China Sea issue. China is not in favour of this as it views this as western influence in the issue, and have always ignored such rulings. Last year also, Singapore tried to include to the NAM summit final document, an endorsement of an international tribunal’s ruing on claims to the South China sea in a Global Times report here. Although Singapore has since denied this, the damage has already been done.

It is quite clear to me from a political strategic point of view why Jack Ma is choosing Malaysia over Singapore. With recent capital controls imposed by the Chinese government here, I think what factor that determines what funds that flows out of China for deals would be the country’s diplomatic relationship with China. In this regard, China’s diplomatic relations with Malaysia has been better than Singapore’s.

Another point I want to add is that Malaysia is the biggest issuer of Islamic bonds from 2000-2014 (Source: here). Jack might be interested in Islamic bond issuance as the investor base is much bigger than conventional bonds.