Speech by Second Minister S Iswaran at the SMU India-Singapore Business Dialogue 2014 at SMU Mochtar Riady Auditorium

Your Excellency Mrs Vijay Thakur Singh, High Commissioner of India to Singapore;

Professor Arnoud De Meyer, President of SMU;

Professor Rajendra Srivastava, Provost and Deputy President of Academic Affairs;

Mr Prashant Saran, Whole-time Member of the Securities and Exchange Board in India;

Distinguished guests,

SMU faculty and students,

Good morning. I am happy to join you for the second SMU India-Singapore Business Dialogue, a platform to discuss how India and Singapore can engage each other more closely.

The BJP’s and its alliance’s victory at the recently concluded general elections adds currency and piquancy to this forum.  Mr Narendra Modi and the BJP have been given a resounding mandate from the people of India.  With a strong majority in the Lok Sabha, expectations are running high that the newly elected government will embark on positive policy changes and initiatives to move India decisively forward in its path of development and growth, while securing its geopolitical interests.  The people and businesses anticipate more opportunities and a brighter future in India, as evident in the headlines and stock markets.  The path ahead is not without its challenges, but Indians have given broad-based support for Mr Modi’s and the BJP’s vision and reform agenda. We congratulate the newly-elected government of India on its electoral victory and wish them every success in this important endeavour. 

India and Singapore enjoy excellent bilateral relations.  Next year not only marks Singapore’s 50th year of Independence, but also 50 years of diplomatic relations between India and Singapore.  Our ties are strong and multi-faceted – between our governments, people and economies. India is a significant trading partner of Singapore.  In 2013, India was Singapore’s 11th largest trading partner and 12th largest export destination, with total trade volume of S$25.5 billion.

There is significant scope to further enhance our bilateral economic cooperation.  In particular, I believe these opportunities lie in India’s industrial, infrastructure and skills development priorities, and the potential for greater regional economic integration.

India’s growth potential is most evident in the projected increase of 300 million young Indian workers by the year 2040, and its rising middle class.  The best way to reap this “demographic dividend” is to invest significantly in the education, capabilities and skills of young Indians – at the national, sectoral and business level.  This is familiar territory for us in Singapore given our resolute commitment – from unions, businesses, and government – to lifelong learning and skills acquisition through pre-employment training and continuing education programmes for workers.  It is an area where our respective companies and industries can collaborate for mutual benefit. 

The investment in technical skills and capabilities takes on added significance in the context of India’s aim to develop a strong manufacturing sector, in tandem with its renowned services industries.  Another key project in this regard is the Delhi-Mumbai Industrial Corridor (DMIC).  The DMIC has the potential to transform India into a global manufacturing hub in a region that stretches 150 kilometres.  Singapore-based companies can participate in this and other similar projects, as investors and especially, in the development of infrastructure.  Some of our companies like Jurong Consultants and Hyflux are already involved in the DMIC, and Ascendas is exploring a joint venture with the Maharashtra Industrial Development Corporation.

India also recognises that manufacturing capabilities, and indeed, wider economic development, must be coupled with adequate capacity in port, power and road infrastructure.  This is also another area where Singapore can make a meaningful contribution through the expertise of our companies and the access to our capital markets.  For example, PSA was recently awarded the contract to develop the fourth container terminal at the Jawaharlal Nehru Port Terminal - the largest container port in India, located within the DMIC. India and Indian companies can also use Singapore as a base to work with major global infrastructure players, such as Punj Lloyd and Samsung, who have based some of their key operations here. 

Access to finance is also a key ingredient of success for such projects and the businesses involved.  With the recent regulatory change and easing of the rules, Indian companies can now list overseas, subject to prescribed conditions, without having to do so first in India. This affords greater flexibility for Indian companies to tap external capital markets. 

In particular, the Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore not only provides easier access for goods and services to our respective markets, it also enables Indian companies to access Singapore’s capital markets to raise capital through a variety of financial instruments.  Some Indian companies have already done so by raising equity capital through Business Trust Listings on the Singapore Stock Exchange, as well as sourcing for debt financing.  One example is the Tata Group which has issued Singapore Dollar-denominated debt in the past one and a half years. 

Singapore and the World Bank have also created the World Bank-Singapore Urban Hub partnership in 2009 to help developing economies learn from Singapore's experience, and for enterprises to structure their products to be more commercially attractive.  IE Singapore also offers the Internationalisation Financial Scheme (IFS), a programme that supports our SMEs that are expanding overseas.  These are various channels that could enhance bilateral capital flows, and we should explore further opportunities to enhance them. 

Beyond the bilateral, there are also significant opportunities to be had through collaboration in and with third countries arising from various regional integration efforts.  One example is the ASEAS Economic Community which will come into force next year, creating a US$2 trillion market of 600 million people.  The ASEAN-India Free Trade Agreement (AIFTA) enhances this economic connectivity, allowing our businesses to jointly explore opportunities in the wider region. For Indian companies, this is an opportunity to access the developing markets of South-East Asia with products and services initially developed for their domestic market.  The Regional Comprehensive Economic Partnership (RCEP), comprising ASEAN and its six Dialogue Partners, is another potential opportunity to enhance opportunities for both Indian and Singaporean companies to partner in trade and investment.

I believe that Indian and Singapore companies are well-equipped to explore and develop such partnerships.  Besides the evident market opportunities, our historical ties, cultural familiarity, and common use of English, especially in business, are assets.   Singapore companies also have a certain familiarity with the Indian market in several sectors due to business activities over the past few decades. These attributes have also been relevant when other countries have sought to partner Singapore companies with the expertise to meet the needs of the Indian market.  One example is the consortium comprising Hyflux and Japanese companies, Hitachi and Itochu, on the sea water desalination plant in Dahej, Gujarat.

With the significant and growing cohort of Indian companies in Singapore, Singapore companies in India, and foreign companies in either or both markets, I expect many more of such partnerships in the coming years. 

Finally, I would like to extend a word to our students.  I strongly encourage you to take full advantage of SMU’s many connections with India which the university has gone to great lengths to secure.  Seize these opportunities in SMU’s culture of “want something, do something” culture.  The exchange programmes and the internships that SMU has are opportunities to immerse yourselves in a different culture, build friendships and broaden your horizons. 

In a globalised economy, companies seek capable individuals who function effectively in multi-cultural teams in an international business environment.  India and the other regional markets offer you an excellent opportunity to hone precisely those skills. 

CONCLUSION

To sum up, there are significant opportunities in India-Singapore economic relations, arising from India’s priorities in manufacturing, infrastructure and skills development, as well as regional market integration efforts.  While the path ahead does have its challenges, our longstanding ties, cultural familiarity and people-to-people links stand us in good stead to jointly participate in these opportunities for mutual benefit. 

I hope that this dialogue session will facilitate a robust exchange of ideas, on the possibilities to be explored, as well the impediments to be removed.  I would like to thank SMU for hosting the India-Singapore Business Dialogue, which brings together thought leaders, businesses, policy makers and students.  I wish you all a fruitful session.