2 March 2008
Singapore to sign FTA with Gulf countries
By VM Sathish
Singapore and the UAE are two physically small nations playing an outsized role in the global economy. Singapore, a model free trade country, has been expanding its ties with Gulf countries in general and the UAE in particular.
Dileep Nair, Singapore’s Consul General to the UAE, spoke to Emirates Business about Singapore’s growing business in the region and his perspective on joint investment opportunities for the two countries. He also downplayed rumours of a bidding war between sovereign wealth funds in the two countries.
What is the status of the UAE-Singapore Free Trade Agreement (FTA)?
Negotiations have been going on for quite some time. The Singapore-UAE bilateral FTA talks have been abandoned for a broader GCC-Singapore FTA. The negotiations were progressing for some time but now they have shifted to the GCC level and we are about to sign an agreement. Singapore has an FTA with Jordan and plans a network of FTAs to expand our trade and investment relationships.
Singapore has been a free trade centre and a FTA with the UAE will not help bilateral trade growth because both the countries have negligible trade barriers. Rather, a FTA will ensure investment guarantees, facilitation of import-export documentation, duty free access and entry to the financial services and e-commerce sectors. The tariff level in both the UAE and Singapore is negligible. Most countries look at a FTA to get a lower tariff rate, but not us.
What is the level of UAE-Singapore trade?
In the Middle East, the UAE is our second largest trade partner after Saudi Arabia. The Singapore Consulate in Dubai, set up only in 2005, is our third diplomatic mission in the region, after Saudi Arabia and Egypt. Singapore is facing an acute talent shortage and currently about 1,000 Singaporeans live in the UAE, mainly Dubai - that number was only 400 in 2004. They work in engineering, as consultants, for exhibitions, and in the trade and hospitality sectors.
There are 100 Singaporean companies in the UAE using Dubai as their regional headquarters. According to the Dubai Chamber, the number is actually around 200. DBS, the largest Singaporean private sector bank is present in the Dubai International Financial centre as an offshore branch. Our main imports are petroleum products and main exports are telecommunications equipment, jewellery, engineering and related services.
Are there any new tie-ups between companies in the two countries?
The biggest UAE companies in Singapore are Danata, which took over the Singapore Catering Company, Horizon Terminals and Dubai Dry Docks, which bought two Singapore Companies - Pan United and Labromier Marine. Istithmar is part of City Development, the largest retail complex in South Beach, and more UAE companies are encouraged to start up business in Singapore. The Al Futtaim Group has acquired a company in Singapore and Singapore Telecom has an office in the Dubai Internet City. Many Singapore IT companies, especially network firms, are in the Emirates.
SMRT, the Singaporean company managing the Metro was selected to run the monorail system on The Palm Jumeirah for Nakheel. PSA Keppel has been running a shipyard in Ajman for the past 15 years. We are actively talking to Dubai Properties and Tatweer to enter Singapore. Emaar acquired the Raffles Campus of Singapore early last year and they are building five international schools in Dubai.
Is the Singaporean Sovereign Wealth Fund competing with the UAE SWF to acquire some companies? Do you see any possible co-operation between the two?
There are misgivings about SWFs. The Singapore Government General Investment Corporation is not a new player in the market. Its investments are motivated by the rate of return. GIC does not indulge in manipulative takeover bids and even after acquiring stakes in companies like Citigroup and Merrill Lynch, it remains a passive investor without board representation or voting rights.
The Singapore SWF and Abu Dhabi Investment Authority (Adia) were competing for some of the same assets, but we were not engaged in a bidding war. It is not in our interest to outbid each other and after the initial bids we left the Peninsular and Oriental to Dubai World. Investments by Singapore and UAE SWFs were independent of each other.
What are the new areas where Singaporean and the UAE companies can work together?
Big Singaporean companies have experience in the Chinese market. Dubai is a financial hub in the Middle East and Singapore is hub in the East. Singapore is a wealth management centre. Rich people in Asia invest either in Singapore or through Singapore in other countries. The UAE has rich investors looking for opportunities. With UAE companies, we can go to China and Vietnam.
Consul General of Singapore in Dubai
Two years ago, Dileep Nair was appointed as the first Consul General of the Singapore Consulate in Dubai. Singapore has no consulate or embassy in any Middle Eastern countries except Egypt, Saudi and the UAE.
From 2000 to 2005, Mr Nair served as Under-Secretary-General for Internal Oversight Services at the United Nations. Prior to his appointment to the UN, he was managing director of the Development Bank of Singapore (DBS), the largest South-East Asian bank.
Before coming to DBS he was CEO of the Post Office Savings Bank of Singapore. And before his career in banking, Nair served his country’s Administrative Service for some 20 years - including a stint as Deputy Secretary at the Ministry of Defence. He was also vice-president of the Singapore Indian Development Association.