Mr S Iswaran at the India Invest 2009

SPEECH BY MR S ISWARAN, SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY, SINGAPORE AT INDIA INVEST 2009 ON WEDNESDAY, 21 OCTOBER 2009, 10.30AM AT THE RAFFLESCITY CONVENTION CENTRE, STAMFORD BALLROOM

Your Excellency Shri. Kamal Nath

Honorable Minister for Road Transport and Highways

Your Excellency Shri D D Lapang

Hon’ble Chief Minister of Meghalaya

Mr. V Saran,

President of the Indian Chamber of Commerce (ICC)

Distinguished Guests, Ladies and Gentlemen,

Introduction

I am very pleased to join you this morning for the inaugural India Invest 2009, organised by the Indian Chamber of Commerce.I would like to extend a warm welcome to our friends from India and wish you a pleasant and productive stay in Singapore.

Asia on the Mend

About a year ago, the world was thrust into a serious financial crisis that threatened the stability and sustainability of the global economy.After a turbulent 12 months, we are now beginning to see some tentative but encouraging signs of a recovery. The IMF, in its latest World Economic Outlook report, points to India and China leading the recovery in Asia[1], as both have navigated the global recession better than most. The IMF has forecast that India and China will grow at rates of 5.4 and 8.5 per cent respectively this year.

The ASEAN economies have similarly begun the slow process of recovery. The Asian Financial Crisis in 1997, ironically, has placed ASEAN in good stead to weather this latest financial crisis.Post-1997, many ASEAN economies instituted reforms to their financial systems with enhanced accountability and transparency. Today, ASEAN’s economic fundamentals are stronger.Foreign reserves have grown and external public debt levels have declined significantly.[2]Balance sheets are healthy and the GDP of ASEAN economies grew at an average of 4.4 percent last year.

One reason for ASEAN’s relative economic resilience is the region’s collective will to keep our markets open. ASEAN member countries recognise that protectionist measures neither aid growth nor sustain economic recovery in the long run.In that regard, the signing in August this year of the India-ASEAN Trade in Goods Agreement was a welcome demonstration of our mutual commitment to free trade. When this agreement comes into force in January next year, it will mark the first step towards the creation of a free trade area between India and ASEAN – a market of almost 1.8 billion people with a combined GDP of US$ 2.75 trillion.

This agreement will result in tariff liberalisation for over 90 percent of products traded between the two regions. Indian exporters will gain access to markets in ASEAN in sectors like machinery, steel, agriculture, auto components, chemicals and synthetic textiles. Indian industries will also enjoy cost-savings when sourcing raw materials from Southeast Asia.

Ladies and gentlemen, we are off to a good start. It is important that we sustain this momentum by working towards the early conclusion of agreements on Services and Investment.In time to come, this FTA will be an important building block for even wider regional economic cooperation and integration through the ASEAN + 6 process.

The Next Stage of India Singapore Relations

Bilaterally, our relationship has also grown from strength to strength.Since the Comprehensive Economic Cooperation Agreement (CECA) was signed in 2005, bilateral trade has grown at a rate of 20% year-on-year to reach S$28.8 billion in 2008, making India one of our fastest growing trade partners. Investment flows have seen exceptional growth. Singapore’s investments into India have more than quadrupled since 2005. We are now the second largest investor in India with FDI standing at US$3.6 billion[3]. India’s investments into Singapore have also increased almost 10-fold since 2005 to reach S$12.8 billion in 2007[4].

Notwithstanding these significant advancements, there is a clear opportunity to take economic links between India and Singapore up several notches.One avenue is for Singapore to play a complementary role linked to India’s plans to develop its infrastructure.The Indian government has announced plans to boost investment in infrastructure to more than 9 percent of GDP by 2014.Notably, it has set up the India Infrastructure Finance Company Limited (IIFCL) for long term investment. Road construction is expected to see a 10-fold increase with20 km of road to be built every day. India has also committed to improving urban infrastructure in the cities and has launched a new scheme of affordable housing to build one million houses for the poor.

Singapore can potentially contribute to this effort in a couple of ways.One is in the area of professional expertise particularly in areas such as urban planning/development and housing given our experience in these fields over the past four decades.The other is in financing whereby Indian infrastructure projects can tap international capital sources through Singapore.

A second avenue is for Indian businesses to draw on Singapore’s strengths and use us as a gateway to the region. Indian companies with operations in the region can centralise their “Control Tower” functions in Singapore to plan and carry out activities such as business and investment planning and coordination; financial control and treasury functions and market development.Indian SMEs can also use Singapore as their launch pad for trading and investment activities in the region.

Singapore has the supporting legal environment for the protection of intellectual property rights. We have established a centre for the arbitration of commercial disputes. In addition, businesses can benefit from Singapore’s global network of FTAs.International Enterprise Singapore, one of the partners for this event, offers tax rebates for trading houses operating in Singapore through its Global Trader Programme. The Economic Development Board also provides incentives to businesses located here through their various schemes such as the International and Regional Headquarters Award and the Finance and Treasury Centre Award.

A third avenue is for Singapore-based companies to collaborate with their Indian counterparts to serve the fast growing needs of the Indian domestic market.India’s economic surge and growing middle class are creating significant opportunities in diverse sectors and regions.But there is also much for foreign enterprises to learn from their Indian counterparts on how to navigate the complex Indian market.Partnerships that marry capabilities and market knowledge are essential for commercial success.

I therefore encourage Indian and Singapore businesses to take full advantage of this India Invest forum, and others like it, which serve as an effective platform for business-matching and networking activities culminating in productive joint ventures.

Conclusion

In closing, I would like to congratulate the Indian Chamber of Commerce, the Singapore Indian Chamber of Commerce and Industry, and the Indian High Commission in Singapore, for organising this inaugural session of India Invest 2009. I wish all of you a very fruitful session.

[1] IMF World Economic Outlook and Global Financial Stability Report Oct 2009

[2] “ASEAN well-positioned to weather global financial volatility”, Speech by Dr, Surin Pitsuwan, Secretary-General of ASEAN, 30 May 2008

[3] Source: Department of Industrial Policy and Promotion, Ministry of Commerce and Industy, India

[4] Source: Department of Statistics, Singapore