Speech by SMS Chee Hong Tat at the Ministerial Plenary "India-Singapore: The Economic Agenda" at the Business and Innovation Summit on India

Your Excellency, Shri Hardeep Singh Puri, Minister of State (Independent Charge) Housing and Urban Affairs, Minister of State (Independent Charge) Civil Aviation, Minister of State of Commerce and Industry of the Republic of India;

Mr Jawed Ashraf, High Commissioner of India to Singapore;

Distinguished Guests;

Ladies and Gentlemen,

Good morning.

Opening

1.         I am delighted to join you for this Business and Innovation Summit on India, and to speak on the economic relationship between Singapore and India.

2.         This is an important and mutually-beneficial relationship that dates back generations. The early Indian pioneers who settled on our shores contributed significantly to Singapore’s success as an entrepot hub, and helped shape the economic growth and development of modern Singapore.

3.         They greatly enriched Singapore’s multicultural society, bringing their traditional arts, religious practices and food, which continue to thrive in Singapore today. Our Indian community is now one of the key nodes of the global Indian Diaspora, and Singaporean Indians have achieved great success in social, political and economic fields over the years.

4.         The members of our thriving Indian community continue to serve as bridges to enhance the relationship between Singapore and India, including in trade and investments. I am glad to know that Singapore was the top investor in India in the first quarter of Financial Year 2019. Indian companies form the largest overseas contingent that have invested in Singapore, and many have set up their regional or global headquarters here.

5.         While historical ties provide a solid foundation for our bilateral relationship, our economic ties provide the on-going sustenance that further deepen our connections and strengthen our links over time.

The interconnected world is being threatened

6.         As globalisation and international connectivity come under threat in the current environment, we cannot assume our economic ties will remain the same as before if we simply continue business-as-usual. It is like rowing a boat in rapid waters, if we do not row harder and move forward, we will be swept back by the fast currents. It is worrying that countries around the world have put up barriers to discourage trade and investments, rather than integrating more closely within a rules-based multi-lateral global system.  This will result in slower overall growth for everyone, with fewer jobs created and lower standards of living.  It could also lead to higher risks of instability and conflicts in different parts of the world. 

7.         Some governments pursue short term populist measures that boost their political standing during elections, but these are often at the expense of the long term interest of their economy and people. Such measures also damage trust between countries and undermine confidence in the global system. In other cases, some governments may be reluctant to open up to the global economy because they are worried that external competition could overwhelm their domestic industries. These protectionist measures end up enriching a small group of connected individuals and companies, but they are detrimental to the country’s economic competitiveness and the overall well-being of its people. 

8.         This is because protectionism encourages inefficiencies; removes incentives for firms to improve their products and services; and reduces the opportunities for innovation and new investments, which are essential for a society to achieve sustainable growth and development. The problem is further exacerbated by rapidly changing technologies and global trade flows, which all economies face. By shielding our companies from such driving forces, they are unable to make regular adjustments to their business models to keep up with changing technologies and market demands. When the pressure eventually becomes too great and changes are forced upon the companies, many are unable to survive because they have fallen too far behind.  The companies then lobby their governments to put up more barriers, which will further worsen the situation as the root cause of the problem is not addressed. 

9.         Ladies and gentlemen, I hope I have persuaded you on the importance to uphold our rules-based multi-lateral global system, and for countries to build more bridges and connections with one another instead of erecting more barriers and walls. The next question I would like to address is: how can we go about doing this?  How do countries integrate more closely with others within the global economy, and promote the flow of trade, capital and ideas across our borders?

Integrating with the global economy

10.       Turning to Singapore and India, both countries have our strengths and value propositions. We should make good use of our comparative advantages, and find concrete ways to enhance our collaborations in different sectors.  We also want to bring in other countries from the region, so that we can enlarge the size of the pie and create more for everyone to share. This abundance mindset is critical to counter zero-sum mentality and achieve a sustainable win-win outcome for all stakeholders. 

Networked Trade Platform (NTP)

11.       Singapore’s strengths include our favourable geographical location and our connectivity. These are some of the factors which contribute to our status as a trade and logistics hub.  We want to enhance our value proposition through the use of technology by developing the Networked Trade Platform (NTP), which allows us to link up with partner countries to provide a single trade window for businesses. 

12.       Under the NTP, electronic forms are exchanged in a seamless manner. This will help exporters around the world to reduce risk and uncertainty, and manage their operations with greater accuracy. The overall improvement in trade processes will help to enable trade flows, and strengthen trade linkages between countries.

Regional Comprehensive Economic Partnership (RCEP)

13.       It is also important for economies in this region to work together towards closer integration. One example is the Regional Comprehensive Economic Partnership or RCEP, which includes India and Singapore.

14.       RCEP is significant because the 16 participating countries account for nearly half of the world’s population and almost forty percent of global trade flows. It helps to create a conducive, rules-based environment for economic exchanges amongst partner countries.  It is also a signal to the world of the growing economic importance and strategic influence of Asia Pacific.

India’s continued presence in the RCEP

15.       Singapore has taken a consistent position since the start of the RCEP negotiations that it is important for RCEP to include India, given the size and potential of India’s economy. We want India to be part of RCEP.  Besides the economic benefits, we believe this will further strengthen the links between India and ASEAN, which is important for having a balance of power that promotes peace and stability in this region.

16.       I am happy to know that His Excellency Prime Minister Modi and his government have also recognised this, and have sought to cultivate closer economic and strategic relations with ASEAN under the Act-East policy.

India has reservations on the RCEP’s benefits

17.       Like all participating countries, India has its list of demands and reservations for RCEP, and how it wants to negotiate this agreement. There has to be some give and take in any negotiation, and I am sure India has carefully considered its options.

18.       When India undertook extensive economic reforms under former Prime Minister Narasimha Rao in 1991, there were also initial apprehensions on how the measures to open up India’s economy would impact its companies and workers.

19.       I think the overall positive outcomes of the 1991 reforms show that the decision to open up and connect with the world was the right one for India. According to data from the World Bank, the size of India’s GDP grew almost 9 times from 1991 to 2016[1], lifting many millions of people out of poverty and improving the quality of life for many more. This was a remarkable achievement.  I think it is timely for India to take further steps now to open up further and integrate more closely with other economies in the region.  This will be essential for the next phase of India’s growth and development. 

20.       RCEP will be the largest and most important trade deal in the world in recent times, and we hope that it can be concluded soon with India as part of this historic agreement.  There is a window to do so within the next few months, and we should strike when the iron is hot and not miss this opportunity. 

Conclusion

21.       Over the years, many Singapore companies have benefitted from the economic opportunities in different industries across India. Likewise, Indian companies have used Singapore’s business ecosystem as a gateway to ASEAN.  We work well together because we have complementary strengths. 

22.       As the world enters into a more uncertain period, it is imperative for countries to build more bridges and forge more partnerships. We need to collaborate with others to jointly tackle global challenges facing all of us, including climate change, poverty reduction and sustainable growth. 

23.       Our chances of success are higher if we work together in a multi-lateral rules-based global system. This is not a perfect system and there is certainly room for further changes and improvement, but we should not throw the baby out with the bath water because there is no equivalent alternative that can deliver the outcomes we need to create a better world for all of us and a better future for our children and grandchildren. 

24.       I wish everyone a fruitful summit ahead.  Thank you.

[1] According to the World Bank’s data for India’s nominal GDP (current US$), India’s GDP rose from USD270.1 billion in 1991 to USD2.3 trillion in 2016, which represents an 851% increase. The data was accessed on 9 September 2019.