The Business Times, India
12 November 2004
The Indian connection
As Singapore and India work up to a major economic agreement, the High Commissioner to India talks to AJOY SEN about some of the opportunities
SINGAPORE’S High Commissioner to India is optimistic about a favourable outcome soon to negotiations for an economic cooperation agreement that is expected to open up substantial business opportunities for the two countries.
’We appear to be back on track and I am optimistic that we would be able to conclude the negotiations for the Ceca soon,’ See Chak Mun said in an interview with The Business Times on Wednesday.
Although he said it would be inappropriate to comment on specific details at this point of the negotiations, Mr See said the Comprehensive Economic Cooperation Agreement, better known as Ceca, would recognise the importance of greater connectivity between Singapore and India.
This greater connectivity would facilitate the growth of tourism, trade and good relations, he said.
But he cautioned that it would be unwise for bureaucrats to specifically predict what the private sector would do. ’The role of government is to create a policy framework that would provide the private sector with more options, and to facilitate trade and investment.’
He said Ceca would include provisions for a Services Agreement and a Mutual Recognition Agreement that would enable India to leverage on Singapore’s position as an Asian-Pacific hub for marketing and consultancy services.
Singapore is home to over 6,000 MNCs. Close to 200 fund management firms and 150 venture capitalists operate out of country and manage over US$200 billion.
Last year, Singapore’s trade with India amounted to US$4.4 billion, an increase of 16.2 per cent over 2002.
’We estimate that Singapore’s cumulative investments in India is US$1.17 billion in 2003, and this does not include those which go through Mauritius.
’I understand that we are now India’s third-largest foreign investor for the first half of 2004,’ said Mr See.
’It is difficult to project how trade and investment would grow after signing the Ceca. But the stronger the commitments to facilitate and protect investments and open up trade, the greater the growth,’ he noted.
Asked about the new markets that Singapore is likely to gain through Ceca, he said one growing trend is the leveraging by Indian companies on Singapore’s connectivity with the rest of the Asia-Pacific region to grow their international business.
There are already 1,400 Indian companies in Singapore. The top 20 Indian IT companies, like Satyam and Tata Consultancy Services, have already established themselves in Singapore to service MNCs and local businesses in the region.
On the major Singapore companies which plan to set up business in India, Mr See said the infrastructure sector is one segment that is of interest to Singapore businesses.
’Companies like Ascendas and Suburna are active in many industrial parks and townships projects throughout India,’ he noted.
Keppel plans to build a township in Bangalore. Changi Airport has also tied up with the Bharti group to bid for the upgrade of Delhi and Mumbai airports.
Commending the work of the officials involved, he said: ’Both India and Singapore made an effort to consult our respective private sector, as well as umbrella organisations such as the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry in India, and the Singapore Business Federation in Singapore.’
Mr See said there was an understandable slowdown in the pace of the negotiations after a new government was elected in India recently.
’Our Indian colleagues explained that they needed to brief the new political leaders on the benefits and the trade-offs that were being negotiated in the Ceca,’ said Mr See.
He also addressed the issue of New Delhi’s concerns that under Ceca, third-country manufacturers would re-route their goods through Singapore and dump them in India.
The commissioner said India’s concerns arise from some bad experiences that it had encountered in the past with other countries.
’Therefore, Singapore understands the caution of the Indian negotiators. However, we have taken pains to demonstrate that India’s concerns are appreciated but groundless,’ he said. There will be a strong Rules of Origin provision to ensure that third-country manufactures are not simply re-routed through Singapore and dumped into the Indian market, he added.
’More importantly, Singapore has an excellent track record in this area, and it may be seen from our existing bilateral free trade agreements with Australia, Japan, the US, and other countries, that Singapore does not abuse its FTAs,’ Mr See said.
Answering another question, Mr See said that, admittedly, India’s bureaucracy and the level of infrastructure have deterred some investors.
However, he said the Indian bureaucracy has definitely changed for the better since the days of reform.
’I am optimistic that reforms will continue, and I hope the Ceca will be part of this process.’