Speech by Minister for Foreign Affairs George Yeo at the Confederation of Indian Industry Partnership Summit on 18 January 2007 - Singapore-India: Roadmap to the Future

Singapore-India: Roadmap to the Future

1 When I was Minister for Trade and Industry, I did not believe at first that a Free Trade Agreement could be negotiated with India. PM Vajpayee had proposed such an agreement during his Official Visit to Singapore in April 2002. During breakfast with Disinvestment Minister Arun Shourie the following morning, I told him candidly that my officials were dripping with scepticism. After all, it was not the first time that the idea had been mooted. Arun listened hard and, to my slight discomfort, replied that he would convey what I had just said to PM Vajpayee. I did not realize how serious the PM was. Negotiations began in earnest.

2 As was to be expected, there were many sceptics on the Indian side too. To them, only Singapore stood to benefit. What advantage was there for India? Singapore was already tariff-free. But, in fact, physical goods were only one part of the story. In any case, India's tariffs were coming down and India was only conceding to Singapore what it was prepared to give to all other countries eventually. Furthermore, as Singapore had no agricultural sector worth speaking about, the sector most politically sensitive to India was not affected. India stood to benefit from the services agreement and the establishment of a framework of trust which enabled it to access international capital more cheaply and attract foreign investments. When I mentioned to USTR Robert Zoellick and EU Trade Commissioner Pascal Lamy that Singapore was negotiating an FTA with India, both were sceptical that a good agreement could be reached. In the end, we were able to conclude a Comprehensive Economic Cooperation Agreement (CECA) which both sides were happy with. Since CECA came into force in August 2005, bilateral trade has shot up. Last year, it grew 40%. Singapore's Foreign Direct Investment into India was also the second-largest in the first seven months of 2006, with total investments of US$520 million, according to India's figures.

3 PM Vajpayee saw CECA in strategic terms. India had already embarked on a "Look East" strategy and closer links with Singapore facilitated the process. There was also an element of friendly competition with China. In December 2000, Chinese PM Zhu Rongji offered an FTA with ASEAN which caught the ASEAN Leaders by surprise. ASEAN Leaders responded positively the following year and at the ASEAN-China Summit in Phnom Penh in November 2002, a Framework Agreement was signed. PM Vajpayee was also in Phnom Penh for the ASEAN-India Summit at that time. To the surprise of his own officials, he told the ASEAN Leaders that India too would want an FTA with ASEAN. It was a bold move which signalled India's engagement of Southeast Asia.

4 When Dr Manmohan Singh became PM in May 2004, we knew in Singapore that while there might be some delay, the basic policy of India's engagement with Singapore and ASEAN would not change. This has become India's tryst with destiny in the new millennium - to become a major player in a re-emergent Asia. We had sensed this early when PM Narasimha Rao set India on a new course in 1991. My Indian friends tell me that it was a move which Rajiv Gandhi would have made, had he become PM again. After PM Rao announced his new policy, both Dr Manmohan Singh and Mr P Chidambaram visited Singapore in October 1991 to speak at a seminar on India's future. Since then, Singapore positioned itself to be a long-term partner for the new India. In 1994, PM Goh Chok Tong initiated the establishment of the International Tech Park in Bangalore. That project quickly moved into Phase Two in November 2000 and has been a major success in our bilateral cooperation. Our partnership has received multi-party support in India, both at the state level and in Delhi. From the early 90's, Singapore also made a special effort to induct Indian talent into Singapore in the economic, academic and cultural fields. Many have come. This has refreshed our blood links. The new Indians in Singapore meld into our society with little difficulty. Some distinguish themselves in community work.

5 Our bilateral relationship is broadening and deepening. It is rooted in our shared culture and institutional inheritance from the Raj, and shaped by an alignment of strategic interests. History is bringing us together, again.

6 At the political level, it behoves Singapore to have India properly established in the new Asian architecture of the 21st century. Diplomatically, Singapore played an active role strengthening India's links with ASEAN and bringing India into the ASEAN Regional Forum and the East Asian Summit. Singapore also supported strongly India's inclusion as a Permanent Member in the UN Security Council. India's full participation in these and other initiatives will help to create a better environment for peace and development in the region.

7 India's improving links with China are good for the region. However, it is to be expected that the re-encounter of these two very big and ancient civilizations would not be a simple matter. It took over 40 years for the Nathu La Pass to be re-opened last year and this is but the beginning. Bilateral trade is growing dramatically. China is likely to be India's largest trading partner in the next couple of years. Investments are bound to follow in both directions. While China has offered a Free Trade Agreement with India, India prefers a more cautious approach. But the longer-term trends are clear. Stronger links between India and China will benefit the countries of ASEAN as we are the historical buffer in between. There is little danger that India's links with China will grow so strong as to threaten us. If anything, India and China are careful not to be made use of by other major powers against their own national interests. An important reason why ASEAN countries pushed for the inclusion of India in the East Asian Summit is the creation of a larger environment for India and China to cooperate, not above our heads, but together with us in Southeast Asia.

8 Singapore therefore shares a strong political interest with India in building a larger framework of Asian cooperation. At the economic level, the cooperation between India and Singapore will grow in all sectors as our economies become more integrated. When CECA was being negotiated, Singapore's objective, put in the simplest terms, was to restore the position of the Raj when trade and investments flowed freely between India and Singapore, and professionals were free to practise under similar laws, regulations and standards. We are not quite there yet. I believe that, in a few years' time, we will begin negotiating CECA Two. Between Hong Kong and Mainland China, they have a free trade agreement called the Closer Economic Partnership Agreement, or CEPA, signed in June 2003. The CEPA is based on a building block approach which provides a mechanism for liberalisation of trade in goods and services in phases. Hong Kong and the Mainland are now engaged in negotiating CEPA Four. In the initial stages, it was India, curiously enough, which feared being swamped by Singapore. In the future, it will be Singapore fearing that it will be swamped by India. But that we can now talk in these terms shows how much the world has changed and our bilateral relationship with it.

9 What India does with Singapore, it should eventually do with the rest of ASEAN as well. While negotiations for an India-ASEAN FTA are making progress, the process is slower than it should be because of a few agricultural products, principally palm oil. I hope that creative win-win solutions can be found so that the larger enterprise is not impeded. Singapore will continue to play a helpful role in this regard.

10 To use Senior Minister Goh Chok Tong's metaphor, we in ASEAN view China and India as our two wings. We are eager to see both wings grow in tandem. ASEAN's trade with China grew from US$40 billion five years ago to US$130 billion last year. It is likely to reach US$200 billion by 2010. In comparison, ASEAN's trade with India grew from about US$10 billion five years ago to about US$20 billion last year. We should try to double it by the year 2010. India's trade with China has also been growing rapidly. Five years ago, it was less than US$4 billion. This year it is expected to reach some US$20 billion, about the same as India's trade with ASEAN. The trends are clear. The economies of India and East Asia are fast integrating.

11 A stronger India will also have more influence in West Asia. Many Islamic countries, fed up by the treatment they receive in the West, are increasingly turning eastwards. Singapore's links to many countries in West Asia have strengthened significantly in the last two years. There are many areas where Indian and Singaporean businessmen can work together in West Asia.

12 Despite our small size, Singapore's presence in India is growing in a number of sectors. Singaporeans are good at system management. Singapore's experience in urban planning and management is receiving considerable attention in India. Singapore is particularly strong in logistics - air, sea and land - which is an area India needs to improve on urgently. For India's economy to reach double-digit growth, many bottlenecks must be cleared. As India's middle classes grow, as more and more Indians migrate to the cities, the country's social and physical infrastructure must be greatly improved. In many areas, Singapore can be a useful partner even though our experience is limited to that of a compact city-state. I like what former Andhra Pradesh Chief Minister Chandrababu Naidu once said of Singapore, that, small though it is, embedded in it is considerable complexity like nano-technology. One area in which India and Singapore are working together on is the establishment of Special Economic Zones (SEZs). Singapore has considerable experience in this area, having established successful SEZs in China and Vietnam.

13 I have talked about the excellent prospects for our greater political and economic cooperation in the coming years. Let me now talk about the prospects for greater cultural cooperation undergirding our political and economic cooperation. A few months ago, a book on the Indian Diaspora was published in Singapore, sponsored by Citibank, Jet Airways, Temasek Holdings, among others. That such a book was conceived and produced in Singapore should perhaps not come as a surprise. Some years ago, a similar book was published in Singapore about the Chinese Diaspora. Modern Singapore was established by the British East India Company for the China trade in 1819. Until 1867, Singapore was governed from Calcutta. The influence of the Raj in Singapore permeated every facet of life in Singapore. Many buildings, monuments, roads and bridges in Singapore today bear names which are better known in India than in Singapore. When the Japanese occupied Singapore in 1942, they tried to subvert British rule in India from Singapore by helping Subhas Chandra Bose establish the Indian National Army. Just two weeks ago, Singapore's Deputy Prime Minister S Jayakumar was invited to the book launch of "Chalo Delhi", the 12th and final volume of the Collected Works of Subhas Chandra Bose (Netaji), in New Delhi with External Affairs Minister Pranab Mukherjee and the former Prime Minister of India, I. K. Gujral. After the war, Indian independence had a major impact on Singapore nationalism. It was only during the period when India turned inwards that our links became attenuated but, even then, not as much as our links with China were weakened by the long years of Mao's reign. With globalisation, our cultural links to both India and China are blossoming again.

14 India's reflection in Singapore society goes down to every facet of daily life. Mustafa Centre, for example, is known by many Indians and NRIs. Early last year, I officiated at the inclusion of the Jains into the Inter-Religious Organisation in Singapore. Their community has grown and is now over 1,000. Just a few weeks ago, I attended the wedding of a Dawoodi Bhora couple at the Bhora Mosque. The men were separated from the ladies. I and my sons were the only ones wearing coloured shirts while everybody else was in white robe, white cap and mostly bearded. Not all were Singaporean. Many relatives and friends came from India. The bride's family had migrated to Singapore some years ago. I knew her since she was a little girl because her mother helped me in my electoral district. The groom was from Sri Lanka. Many threads from India are woven into the Singapore fabric and more will be in the future. Singapore's presence in India is also growing steadily.

15 In short, we can go long on Singapore-India relations. It is a mutually beneficial relationship which will benefit larger Asia.
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